Lian Soon Construction Pte Ltd v Guan Qian Realty Pte Ltd

• Jurisdiction: Singapore
• Judge: Karthigesu JA
• Judgment Date: 05 April 1999
• Neutral Citation: [1999] SGCA 25
• Citation: [1999] SGCA 25
• Defendant Counsel: Giam Chin Toon SC and Peter Chow (Wee Swee Teow & Co)
• Published date: 19 September 2003
• Plaintiff Counsel: Christopher Chua and Lee Chau Ee (Drew & Napier)
• Date: 05 April 1999
• Docket Number: Civil Appeal No 269 of 1998
• Court: Court of Appeal (Singapore)
• Subject Matter: Probability of recovering moneys --Whether stay of execution should be granted pending appeal,Civil Procedure,Adducing further evidence after summary judgment,Exercise of judge's discretion to grant leave to hear further evidence,Appeals,Appeal not devoid of merit,Appeal against summary judgment,Appeal from judge-in-chambers

Judgment:

KARTHIGESU JA

(delivering the grounds of judgment of the court): This appeal arose from the two orders made by Lai Kew Chai J on 2 November 1998, namely, (i) allowing the respondents to file an additional affidavit for the purposes of the respondents` appeal to the judge-in-chambers against the judgment obtained by the appellants on 16 October 1998 and (ii) ordering a stay of execution of that judgment pending the disposal of the respondents` appeal.

2. The facts

The appellants were the main contractors engaged by the respondents for a building project (the erection of a block of ten-storey residential apartments) at Kim Yam Road. The main contract signed between the parties on 18 July 1996 incorporated the Standard Form of Articles and Conditions of Building Contract (Lump Sum) (4th Ed) published by the Singapore Institute of Architects (the `SIA Conditions`).

3.Pursuant to the main contract, the appellants were to complete the main building works by 25 August 1997. During the course of the works, the architects issued Interim Certificates Nos 1 to 17. The appellants were paid a sum of $3,061,000.54 in respect of Interim Certificates Nos 1 to 10 only. The last payment in respect of Interim Certificate No 10 was received by the appellants on 22 January 1998. Interim Certificates Nos 18, 19 and 20 were later issued but these are not in issue here for they are the subject of separate proceedings commenced by the appellants.

4.By a letter dated 19 August 1998, the appellants` solicitors sent the respondents a letter of demand. On 24 August 1998, the appellants commenced proceedings against the respondents for non-payment of Interim Certificates Nos 11-17. On 7 September 1998, the appellants filed an application for summary judgment for the sum of $3,174,747.92 and interest, and the application was fixed for hearing on 16 October 1998. By a letter dated 8 September 1998, the appellants terminated the contract with the respondents. A joint inspection of the site was carried out on 30 September 1998 and by a letter dated 2 October 1998, the appellants informed the respondents that they were handing over the site to them. The respondents replied by letter dated 5 October 1998 to say that they had taken back possession of the site without prejudice to their contractual rights.

5.On 13 October 1998, the architects issued delay certificates for the main building and sub-station works. The architects computed the total liquidated and ascertained damages for the delay in the main building works at $3,270,000. The respondents filed two affidavits on 14 October 1998 and another on 15 October 1998 for the summary judgment hearing.

6.At the hearing on 16 October 1998, the learned deputy registrar gave final judgment for $2,212,435.63, interest and costs against the respondents. The sum allowed by the deputy registrar represented the sums under Interim Certificates Nos 11 to 17, after adjustments for arithmetical errors and deductions for GST and amounts previously paid to the appellants` subcontractors. No deduction was made in respect of liquidated and ascertained damages. By a letter dated 16 October 1998, that is to say on the same day the appellants got summary judgment, the appellants` solicitors served a statutory notice pursuant to s 254 of the Companies Act (Cap 50) and threatened to present a winding up petition against the respondents if they failed to pay the judgment debt within 21 days, ie by 6 November 1998.

7.On 20 October 1998, the respondents filed an appeal to the judge-in-chambers against the decision of the deputy registrar and the appeal was fixed to be heard on 17 November 1998. On 26 October 1998 the appellants obtained a garnishee order in respect of debts due or accruing due from Malayan Banking Berhad to the respondents. The show cause hearing has been adjourned pending the hearing of this appeal. On 28 October 1998, the respondents filed a summons-in-chambers for orders that they be at liberty to file an additional affidavit for the purpose of the appeal to the judge-in-chambers and further, that the execution of the summary judgment be stayed pending the respondents` appeal and that the costs of the respondents` application be costs in the appeal.

8.The respondents` application was heard by Lai Kew Chai J on 2 November 1998, and his honour made an order in terms of the respondents` application and fixed the costs of the application at $2,000.

9.On 6 November 1998, the appellants appealed against the decision of Lai Kew Chai J. Pursuant to the appellants` request, the respondents agreed that the registrar`s appeal fixed for 17 November 1998 be adjourned to a date to be fixed after the outcome of this present appeal.

10. The decision below

On the issue of the admission of fresh evidence, Lai Kew Chai J held that a distinction had to be drawn between the admission of fresh evidence by the judge-in-chambers sitting on appeals from the registrar and the Court of Appeal. A lower threshold was imposed for the former, and a judge-in-chambers could admit fresh evidence, even in the absence of special reasons, so long as the materiality of the fresh evidence was important, even though it was not conclusive.

11.The learned judge was mindful that an appeal did not operate as a stay of execution and that the likelihood of success was not by itself a sufficient ground for a stay. However, he was persuaded that there was a real risk that the repayment by the appellants upon a successful appeal would be seriously in doubt unless execution on the judgment was stayed. Further, he felt that there was a strong counterclaim which could overtop the judgment debt.

12. The appeal

There were two issues in this appeal. Firstly, whether the learned judge had erred in the exercise of his discretion in granting a stay of execution on the summary judgment. Secondly, the principles governing the exercise of a judge`s discretion in determining whether leave should be given for further evidence to be admitted on an appeal against summary judgment from the registrar to the judge-in-chambers, and whether the learned judge had erred in the exercise of his discretion in this instance. A third question also arose. It was whether the learned judge had erred in the exercise of his discretion in ordering costs of the respondents` application which he fixed at $2,000 to be costs in the appeal.

13. Stay of execution pending appeal

The rule of thumb is that an appeal does not operate as a stay of execution. Regarding appeals from decisions of the registrar to the judge-in-chambers O 56 r 1(4) provides:

Except so far as the Court may otherwise direct, an appeal under this Rule shall not operate as a stay of proceedings in which the appeal is brought.

Also, s 41 of the Supreme Court of Judicature Act (Cap 322) states:

An appeal shall not operate as a stay of execution or of proceedings under the decision appealed from unless the court below or the Court of Appeal so orders and no intermediate act or proceeding shall be invalidated except so far as the Court of Appeal may direct.

14.The position in Singapore was succinctly laid down by Yong Pung How CJ in Lee Sian Hee v Oh Keng Soon [1992] 1 SLR 77 at p 78H:

While the court has power to grant a stay, and this is entirely in the discretion of the court, the discretion must be exercised in accordance with well established principles ( Lee Kuan Yew v JB Jeyarenam [1990] SLR 740 [1991] 1 MLJ 83 ). First, as a general proposition, the court does not deprive a successful litigant of the fruits of his litigation, and lock up funds to which prima facie he is entitled, pending an appeal ( The Annot Lyle [1886] 1 PD 114 at p 116). However, when a party is exercising his undoubted right of appeal, the court ought to see that the appeal, if successful, is not nugatory ( Wilson v Church (No 2) [1879] 12 Ch D 454 at pp 458-59). Thus, a stay will be granted if it can be shown by affidavit that, if the damages and costs are paid, there is no reasonable probability of getting them back, if the appeal succeeds ( Atkins v Great Western Rly Co [1886] 2 TLR 400).

Then at p 80:

... In the affidavit filed, there are no indications of special circumstances other than the alleged likelihood of success in the appeal. ... the likelihood of success is not by itself sufficient, even in the context of an appeal against a summary judgment. The applicant has also contended in the affidavit that he has made an application to adduce further evidence. In our opinion, he appears to have many more steps to take to get his appeal off the ground. If a bald assertion of success is adequate, then a stay would be granted in every case, for every appellant must expect that his appeal will succeed ( Atkins v Great Eastern Rly Co). This is quite contrary to the Supreme Court of Judicature Act, the Rules of the Supreme Court, and to established case law.

15.The appellants` counsel asserted that the respondents` appeal against summary judgment was devoid of merit and the respondents had not shown that there was no reasonable probability of recovering the judgment debt in the event of a successful appeal. These assertions will now be discussed in turn.

16. Was the respondents` appeal against summary judgment devoid of merit?

The appellants claimed for certified sums due under the interim certificates issued under the SIA form of contract. At the summary judgment hearing, the respondents contended that they were entitled to set-off liquidated damages against the certified amounts in the interim certificates. For this, the respondents relied on two delay certificates relating to the main building contract and sub- station works issued by the architect on 13 October 1998, three days before the hearing of the summary judgment application on 16 October 1998. In this present appeal, the respondents relied only on the delay certificate issued with respect to the main building contract as the...