Multiplex Constructions Pty Ltd v Sintal Enterprise Pte Ltd

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 03 March 2005
• Neutral Citation: [2005] SGCA 10
• Docket Number: Civil Appeal No 61 of 2004
• Date: 03 March 2005
• Published date: 08 March 2005
• Year: 2005
• Plaintiff Counsel: Vinodh S Coomaraswamy and Pradeep Pillai (Shook Lin and Bok)
• Citation: [2005] SGCA 10
• Defendant Counsel: Andre Maniam and Paul Sandosham (Wong Partnership)
• Court: Court of Appeal (Singapore)
• Subject Matter: Stay of court proceedings,Main contractor exercising right to set off damages for delay from sums due to sub-contractor,Section 6 Arbitration Act (Cap 10, 2002 Rev Ed),Arbitration,Whether such issues amounting to disputes to be referred to arbitration,Whether set-off notices reasonably accurate,Whether liquidated damages sole remedy for delay,Grounds

3 March 2005 Judgment reserved.

Judith Prakash J:

Introduction

1 Multiplex Constructions Pty Ltd (“Multiplex”), an Australian company, has a branch in Singapore that provides building, construction and engineering services. In January 2001, it was employed by Great Eastern Life Assurance Company Ltd (“the employer”) to build a housing development at Haig Road. In due course, the employer nominated Sintal Enterprise Pte Ltd (“Sintal”), a company engaged in the supply and installation of stonework, as the contractor to supply and install the stonework required by the project.

2 Multiplex entered into two sub-contracts with Sintal in relation to the project. The first was for the supply and delivery of stone finishes, specifically marble, and the second was for the supply of labour and material for the installation of the marble.

3 In March 2004, Sintal sued Multiplex in the High Court for various sums of money and damages that it claimed were due to it under both sub-contracts. Multiplex applied for a stay of those proceedings on the basis of an arbitration clause in each of the sub-contracts. It was successful before the assistant registrar in obtaining a stay of all but one of the claims made by Sintal. Multiplex then appealed to a judge in chambers against the refusal to stay that claim which was a claim made under the first sub-contract. Justice Lai Siu Chiu dismissed that appeal in June 2004. Multiplex has now made a further appeal to this court.

The legal position

4 The issues that arise on this appeal are substantially the same as those considered below. The main point that has to be determined by this court is whether there is a dispute between the parties that should be stayed in favour of arbitration.

5 The application made by Multiplex to stay the High Court action was brought under s 6 of the Arbitration Act (Cap 10, 2002 Rev Ed) (“the Act”). This section provides that a court may stay proceedings brought contrary to an arbitration agreement, if the court is satisfied that “there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement” (see s 6(2)(a)). It is well established that if the court finds that there is no dispute between the parties, then generally there will be no sufficient reason to stay court proceedings as there will be nothing to refer to arbitration.

6 The parties are in substantial agreement on the legal principles that guide the court when it hears an application under s 6 of the Act. Both parties cited the decision in Kwan Im Tong Chinese Temple v Fong Choon Hung Construction Pte Ltd [1998] 2 SLR 137 (“the Kwan Im Tong case”). There, while this court accepted the principle enunciated in Tradax Internacional SA v Cerrahogullari TAS (The M Eregli) [1981] 2 Lloyd’s Rep 169 that if the claim is indisputable then the court has jurisdiction to hear the matter instead of referring it to arbitration, it also sanctioned a holistic and common-sense approach towards determining the existence of a dispute. In so doing, this court adopted the following observation of G P Selvam JC (as he then was) in Uni-Navigation Pte Ltd v Wei Loong Shipping Pte Ltd [1993] 1 SLR 876 at 879, [16] and [17]:

The common form arbitration agreement provides for disputes to be decided by arbitrators. In such a case the court should, save in obvious cases, adopt a holistic and commonsense approach to see if there is a dispute. The justification for this approach is that it is important to hold a party to his agreement and avoid double and split hearing of matters. …

If the defendant, therefore, makes out a prima facie case of disputes the courts should not embark on an examination of the validity of the dispute as though it were an application for summary judgment.

This court in the Kwan Im Tong case (per Karthigesu JA at [10]) also indicated that while O 14 summary judgment principles aided the court in determining whether a claim should be immediately allowed in very obvious cases, it was not entirely safe to apply them in determining whether the parties should be bound by their agreement to arbitrate. His Honour agreed with the observation of Parker LJ in Home and Overseas Insurance Co Ltd v Mentor Insurance Co (UK) Ltd [1990] 1 WLR 153 at 158 that, except in a very clear case, in a situation where there was an arbitration clause, full-scale argument should not be permitted since the parties had agreed on their chosen tribunal and the defendant would be entitled, prima facie, to have the dispute decided by that tribunal in the first instance. This court concluded, on the basis of the authorities it had discussed, that it was the party resisting the stay of proceedings who had the burden of showing that the other party had no defence to the claim.

Background

7 We now turn to the facts of this case. The sub-contract in question was contained in various documents. These included a letter of acceptance dated 23 April 2001 that was signed by both parties, and the Conditions of Sub-Contract for use in conjunction with the Main Contract (2nd Ed, 2000, published by the Singapore Institute of Architects) (“the Conditions”) which in turn incorporated two Bills of Quantities, the first being entitled Bill 1 – General Conditions and Preliminaries (“the GCP”). Under the sub-contract, Sintal was required to complete the sub-contract works by 29 July 2002. That date was also the original completion date for the main contract but it was subsequently extended by agreement between Multiplex and the employer.

8 In the course of the works and between 29 April 2003 and 11 August 2003, the architect for the project issued interim certificates nos 27, 28, 29 and 30 for a total amount of $485,268.55 in respect of marble supplied by Sintal. Although Multiplex received payment from the employer under the four certificates, it did not pay Sintal the amounts certified due. Instead, it sought to set off against the certified sums losses that it claimed it had sustained by reason of Sintal’s delay under the sub-contract. Pursuant to cll 11.4 and 11.5 of the Conditions, Multiplex issued four set-off notices against Sintal’s claim for the certified sums, one notice for each of the interim certificates.

9 In the first three notices, Multiplex claimed that Sintal’s delay in performance under the sub-contract had caused the project to be delayed by 154 days between 2 December 2002 and 4 May 2003. Appendix H to each of the three notices stated that Multiplex’s site overheads and running costs were $10,825.45 per day and these totalled $1,667,118.73 for the full period. The fourth notice stated that Sintal’s delay had caused the project to be delayed by 196 days between 18 December 2002 and 1 July 2003. Using the same daily rate applied for the first period of delay, the damages claimed by Multiplex for the extended period amounted to $2,121,787.48.

10 Sintal included its claim for $485,268.55 in its High Court suit. This was the only claim that the assistant registrar refused to stay. The assistant registrar considered that there were no disputes that could be referred to arbitration. On appeal, Multiplex argued that there were disputes that had to go to arbitration. The first dispute arose because it was unclear from the contractual documents whether Multiplex was entitled to both general damages and liquidated damages or whether liquidated damages was the sole remedy for delay. Multiplex referred to cl 11.4 of the Conditions and Item I at p B1/11 of the GCP (“Item I”) as evidence that general damages for delay were available under other provisions of the sub-contract. Secondly, there was a dispute over the validity of the set-off notices. Whilst Sintal had claimed that there were defects in the notices, the position taken by Multiplex was that cl 11.5(i) of the Conditions only required reasonable accuracy in particularising loss and this requirement had been amply satisfied. It submitted that these disputes relating to Sintal’s claim under the interim certificates and Multiplex’s set-off of the certified sums should be properly resolved in arbitration, along with the remaining disputes between the parties.

The decision below

11 Before we go to the judge’s findings (reported at [2004] 4 SLR 841), it would be helpful for the relevant contractual provisions to be set out. These are:

(a) cl 10.00 of the letter of acceptance:

CONTRACT PERIOD AND LIQUIDATED DAMAGES

The commencement date shall be 16^th January 2001 and the completion of the Sub-Contract Works shall be as follows:

1. Blk 1 – 12^th Sept 2001 till 26^th Jan 2002

2. Blk 2 – 22^nd Sept 2001 till 6^th Feb 2002

3. Blk 3 –22^nd Sept 2001 till 22^nd Feb 2002

4. Blk 4 – 22^nd Sept 2001 till 22^nd Feb 2002

5. Mock up – by 15^th June 2001

Liquidated and ascertained damages of S$30,000.00 per calendar day will be imposed for late completion of the Sub-Contract Works.

(b) cll 11.4, 11.5 and 15.1 of the Conditions:

General Damages for Delay

11.4 The Contractor may set off against any monies due to the Sub-Contractor under the Sub-Contract, such loss or damage suffered or incurred by him as a result of the failure of the Sub-Contractor to carry out the Sub-Contract Works with diligence or due expedition or to complete the Sub-Contract Works by the date or dates specified in Schedule III hereto or the date or dates as extended until such date as may be certified by the Contractor in his Sub-Contract Completion Certificate.

Conditions for Set-Off

11.5 Without prejudice to the Sub-Contractor’s rights under general law to dispute any set off by the Contractor, it shall be a condition precedent for such set off by the Contractor that:

(i) the set-off has been quantified in detail with particulars and with reasonable accuracy

(ii) the Contractor has given to the Sub-Contractor written notice specifying his intention to set-off the amount so quantified together with the required details under clause 11.5(i) of this Sub-Contract and...