Ng Chin Siau and Others v How Kim Chuan

• Jurisdiction: Singapore
• Judgment Date: 06 March 2007
• Date: 06 March 2007
• Docket Number: Originating Summons No 749 of 2006
• Court: High Court (Singapore)

Ng Chin Siau and others

Plaintiff

and

How Kim Chuan

Defendant

[2007] SGHC 31

Judith Prakash J

Originating Summons No 749 of 2006 (Summons No 4825 of 2006)

High Court

Arbitration–Award–Recourse against award–Appeal under Arbitration Act–Whether leave to appeal against High Court decision on appeal against findings of arbitrator should be granted on ground that question of law of general importance or “special reasons” existing–Applicable principles–Section 49 (11) Arbitration Act (Cap 10, 2002 Rev Ed)

The defendant and the plaintiffs practiced in various partnerships with each other in five dental practices and a dental laboratory business. As the result of a dispute, the defendant issued a notice of retirement from the various partnerships. In accordance with the partnership agreements, the plaintiffs paid a sum of $65,555.29 to the defendant as a retiring partner. The defendant claimed that the amount due to him was much higher. The dispute was referred to arbitration.

In respect of a dental practice in Hougang (“the Hougang partnership”), the arbitrator had held that cl 10.3 of the Hougang partnership agreement was applicable to the defendant. That provision stated, inter alia,that if the goodwill of the partnership could not be mutually agreed, the valuation would be determined by a mutually agreed valuer or, failing that, the average valuation made by two independent valuers appointed by each partner. In valuing the goodwill of the Hougang partnership, the arbitrator took the average of the figures in the expert report of Mr Teh Kwang Hee (“Mr Teh's report”) as the plaintiffs' valuer, and the report by Ewe, Loke & Partners (“Ewe's report”) as the defendant's valuer. Another valuation on the defendant's behalf by Mr Koh of TK Low & Company (“Mr Koh's report) was rejected. The arbitrator ordered that the plaintiffs pay the defendant $215,333.74 as the valuation of goodwill in the Hougang partnership.

Both the parties sought leave to appeal against the arbitrator's decision. Only the plaintiffs were given leave to appeal to the High Court. The plaintiffs' appeal before a High Court judge succeeded. It was held that Ewe's report should have not been used as it had not been relied on by the defendant as evidence of goodwill and only Mr Teh's report ought to have been considered. The arbitrator's award was accordingly varied to $54,017.47. The defendant sought leave to appeal against the High Court judge's decision.

Held, dismissing the application with costs:

(1) Under s 49 (11) of the Arbitration Act (Cap 10, 2002 Rev Ed), the court could grant leave to appeal to the Court of Appeal against a decision on an appeal from an arbitration award only if the question of law before it was one of general importance or one which for some other special reason should be considered by the Court of Appeal: at [31] and [32].

(2) A question of law of general importance was where the question was one of general principle upon which further argument and a decision of a higher tribunal would be to public advantage. A question of law was a finding of law that the parties disputed and that required the guidance of the court to resolve: at [32].

(3) The interpretation of cl 10.3 was not in issue in the appeal. The decision arose out of unique circumstances which could not be exactly replicated. No issue of general importance arose in that only well-established and non-controversial principles were applied: at [44].

(4) It was not any error of law on the part of the court hearing the appeal from the arbitrator that would found an appeal to the Court of Appeal as a “special reason”. Only the correction of egregious errors of law should qualify as a “special reason”. It would be a “special reason” if the question of law was a question on which the judge's decision had been obviously wrong. The formulation “obviously wrong” imposed a higher burden on the prospective appellant than the formulation “prima facie error of law” did: at [34].

(5) The finding that cl 10.3 (iii) was not applicable on the basis that it was not adequately pleaded was not obviously wrong so as to permit an appeal to the Court of Appeal. The court did not substitute its valuation for that of the arbitrator's and no findings of fact were made and, as such, there was no question of remitting the matter back to the arbitrator: at [50] and [51].

Abdul Rahman bin Shariff v Abdul Salim bin Syed [1999] 3 SLR (R) 138; [1999] 4 SLR 716 (refd)

Anthony s/o Savarimiuthu v Soh Chuan Tin [1989] 1 SLR (R) 588; [1989] SLR 607 (folld)

Evergreat Construction Co Pte Ltd v Presscrete Engineering Pte Ltd [2006] 1 SLR (R) 634; [2006] 1 SLR 634 (distd)

Multi-Pak Singapore Pte Ltd v Intraco Ltd [1992] 2 SLR (R) 382; [1992] 2 SLR 793 (refd)

Northern Elevator Manufacturing Sdn Bhd v United Engineers (Singapore) Pte Ltd [2004] 2 SLR (R) 494; [2004] 2 SLR 494 (folld)

Yap Chwee Khim v American Home Assurance Co [2001] 1 SLR (R) 638; [2001] 2 SLR 421 (refd)

Arbitration Act (Cap 10, 2002 Rev Ed) s 49 (11) (consd);ss 49 (5), 49 (10)

Supreme Court of Judicature Act (Cap 322, 1999 Rev Ed) s 34 (2)

N Sreenivasan and Collin Choo (Straits Law Practice LLC) for the plaintiffs

Lok Vi Ming SC, Mr Kirindeep Singh and Mark Seah (Rodyk & Davidson) for the defendant.

Judgment reserved.

Judith Prakash J

1 Ihave before me a summons filed by the defendant, How Kim Chuan (“Mr How”), seeking leave to appeal to the Court of Appeal against the decision that I delivered on 11 October 2006 in these proceedings. Then, I had allowed the plaintiffs' appeal against the award given by the arbitrator in the arbitration proceedings known as ARB059/DA15/04 which were proceedings between Mr How and the plaintiffs (“the partners”) as his erstwhile partners in a dental clinic. In order to understand the issues that arise in the summons it is necessary to go into the history of the matter.

The partnerships and the dispute

2 Prior to 11 May 2002, Mr How and the partners (in different combinations) were practising in partnership in five dental practices located in various parts of Singapore and also in a business that ran a dental laboratory. As a result of a dispute, on 11 May 2002, Mr How issued a notice of retirement from the various partnerships. The partnership agreements provided for certain moneys to be paid to a retiring partner and the parties had negotiations on the amounts payable to Mr How. Eventually the partners paid a total sum of $65,555.29 to Mr How which they calculated as being the amount due to him. Mr How disagreed and claimed that the amount due was considerably larger. Subsequently, the parties agreed to refer all disputes and differences arising under the partnership agreements to arbitration.

3 On 12 October 2004, Mr How issued a notice of arbitration. On or about 14 February 2005, the Singapore International Arbitration Centre (“SIAC”) appointed Mr Lim Joo Toon (“the arbitrator”) as the sole arbitrator in respect of the arbitration proceedings between Mr How and the plaintiffs.

4 Mr How's claim in the arbitration proceedings was set out in his amended statement of case. There, he averred that at all material times he had been a partner of a dental practice known by the name and style of Q & M Dental Surgery. This name was used by a chain of dental clinics but each clinic belonged to different partners who all practiced under the name and style of Q & M Dental Surgery. In para 6 of the statement of case, Mr How stated that he was a partner of five Q & M Dental Surgery clinics, those located at Jurong East, Hougang, Yishun, Khatib and Tiong Bahru, which were established on varying dates between March 2000 and March 2002, as well as of the Megadent Dental Laboratory. In para 7, Mr How said that he had executed a partnership agreement on 22 May 2000 in respect of the Hougang practice. He then went on to recount the circumstances of his retirement from the several practices. In para 11, he set out the payments that had been made to him by the various partnerships upon his retirement. He gave the breakdown as follows:

(a)	Jurong East	$5,348.99
(b)	Hougang	$32,535.00
(c)	Yishun and Khatib	$14,480.06
(d)	Tiong Bahru	$7,234.72
(e)	Megadent Dental Laboratory	$5,956.52

Mr How pleaded in para 13 that he was dissatisfied with the above payments because they were insufficient, inequitable and did not represent the fair market value due to him. In para 14, Mr How said that he was entitled by the partnership agreements that he had signed or in law or in equity to:

(a) areturn of his capital contributions in the various partnerships; and

(b) ashare of profits and goodwill in accordance with his percentage share in these various partnerships.

5 Paragraphs 15 to 18 of the statement of case are important and I therefore quote them in full:

1. 15. The Claimant's [Mr How's] entitlement as set out in para 14 above ought to be calculated and determined on a Fair Market Value Basis.

1. 1. PARTICULARS

      (a) The method of calculation to obtain a Fair Market Value ought to be the Income Capitalisation Method.

   2. (b) The Income Capitalisation Method requires the Partners to determine the average earning of the Partnerships and multiply the same by the price-earning ratio.

2. 16. The Claimant had appointed C. C. Koh & Co, a Certified Public Accountant, to calculate and determine the Fair Market Value.

3. 17. A report was prepared by C. C. Koh & Co for the Arbitration to which the Claimant will provide and exchange the same with the Partners upon directions to be given by the Arbitrator.

4. 18. The Claimant now claims:-

   1. (a) For directions that all necessary Accounts and Inquiries to be taken and made, if required:

   2. (b) For an award of payment of such sum as may be found due to the Claimant;

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6 In their amended respondents'...