Permasteelisa Pacific Holdings Ltd v Hyundai Engineering and Construction Co Ltd

• Jurisdiction: Singapore
• Judge: Judith Prakash J
• Judgment Date: 15 February 2005
• Neutral Citation: [2005] SGHC 33
• Date: 15 February 2005
• Subject Matter: Whether to grant leave to appeal on questions of law posed by defendant,Appeal under Arbitration Act,Whether arbitration proceedings misconducted by arbitrator,Recourse against award,Award,Whether to set aside certain holdings in arbitrator's award,Arbitration Act (Cap 10, 1985 Rev Ed),Arbitration,Misconduct under Arbitration Act,Whether to remit certain matters to arbitrator for reconsideration
• Docket Number: Originating Motion No 5 of 2004
• Published date: 16 February 2005
• Defendant Counsel: Tan Liam Beng (Drew and Napier LLC)
• Court: High Court (Singapore)
• Plaintiff Counsel: George Tan and Monica Neo (ChanTan LLC)

15 February 2005 Judgment reserved.

Judith Prakash J:

Background

1 Hyundai Engineering & Construction Co Ltd (“Hyundai”) was appointed by Golden Development Pte Ltd (“the Employer”) as the main contractor for a construction project at Anthony Road/Peck Hay Road/Clemenceau Avenue (“the project”). Hyundai engaged Permasteelisa Pacific Holdings Limited (“PISA”) as the nominated sub-contractor for the design, supply, delivery and installation of aluminium curtain-walling and glazing at the project. Disputes arose relating to the sub-contract works and the parties went to arbitration. PISA was dissatisfied with various aspects of the arbitration award (“the Award”) and has therefore applied to the court for various reliefs. As the arbitration proceedings commenced prior to the enactment of the Arbitration Act 2001, this application is governed by the provisions of the Arbitration Act (Cap 10, 1985 Rev Ed) (“the Act”).

2 The parties’ relationship is governed by a written sub-contract dated 14 August 1998 (“the sub-contract”) that incorporates the Conditions of Sub-Contract (1980 Ed, 1990 Reprint) (“Sub-Contract Conditions”) published by the Singapore Institute of Architects (“SIA”) for use in conjunction with the main contract. The sub-contract stated that the commencement date of the sub-contract works would be 2 August 1997. It also stated that these works were to be completed in such stages as to enable Hyundai to complete the main contract works by 10 August 1999. Subsequently, the completion date was modified by a supplemental agreement.

3 Whether or not PISA completed the sub-contract works was one of the major matters in dispute in the arbitration. PISA’s stand was that the sub-contract works were completed on or about 15 November 2000. Hyundai denied that the works were completed then, or at any time thereafter, as it alleged that the glass components of the curtain wall panels were, and remained, badly scratched. The parties disagreed on the criteria applicable in assessing whether the scratches were defects in the work or not.

4 By a letter dated 17 August 2001, PISA gave notice to Hyundai of its intention to refer the disputes to arbitration. The parties were unable to agree on the appointment of an arbitrator. So, on 19 December 2001, the President of the SIA appointed Mr Johnny Tan Cheng Hye (“the arbitrator”) as the sole arbitrator to hear and determine the matter. The arbitrator subsequently issued directions providing for the conduct of the arbitration. Among other things, it was directed that:

(a) the rules applicable to the proceedings would be the Arbitration Rules of the SIA;

(b) the parties were to file and exchange lists of documents and conduct inspection of each other’s documents; and

(c) the parties were to file agreed bundles of documents and also to file and exchange affidavits of evidence-in-chief of their witnesses.

The parties exchanged pleadings in accordance with the directions of the arbitrator and, in response to PISA’s claim, Hyundai filed a counterclaim.

5 The arbitration hearing was conducted over 33 days during the period from 19 September 2002 to 16 May 2003. It was conducted according to formal procedures similar to those adopted during court hearings. The witnesses, who had filed their affidavits of evidence-in-chief, were called and examined. The agreed bundles contained documents that had been agreed with regard to authenticity only. Exhibits were formally tendered, marked and admitted through appropriate witnesses. After the hearing of the evidence concluded, the parties filed substantial written submissions.

6 The arbitrator delivered the Award on 31 January 2004. It was a lengthy award containing more than 500 paragraphs. In the final analysis, the arbitrator awarded Hyundai the sum of $1,489,126.82 being the amount of its counterclaim less the sum of PISA’s claim. This sum was corrected by the arbitrator on 16 March 2004 to $1,463,481.55. In the meantime, on 19 February 2004, PISA filed these proceedings seeking the following reliefs:

(a) that the Award may be set aside pursuant to s 17 of the Act on the ground that the arbitrator had misconducted himself or the proceedings;

(b) further or in the alternative, that PISA be granted leave to appeal on various questions of law arising out of the Award;

(c) in the further alternative, that the matter be remitted to the arbitrator pursuant to s 16(1) of the Act with the court’s opinion, judgment or direction; and

(d) in the further alternative, that the arbitrator may be ordered, pursuant to s 28(5) of the Act, to state reasons for the Award in sufficient detail to enable the court, should an appeal be brought, to consider any question of law arising out of the Award.

7 In arguments, PISA clarified that it was dissatisfied with the arbitrator’s decision on two main groups of issues. These were:

(a) time-related issues – involving issues of completion, delays, extensions of time, liquidated damages, and PISA’s claim for compensation for the period of delays for which it was granted extension of time; and

(b) work-related issues – the finding of $1,003,888.39 in favour of PISA without any award thereon, and the summary dismissal of variation claims, the claim for the costs of glass panes already replaced and the rejection of PISA’s claim for replacement of original stayarms.

PISA pointed to various paragraphs of the Award and indicated which paragraphs, it thought, raised questions of law and which indicated misconduct by the arbitrator. I will consider PISA’s complaints in turn after setting out, briefly, the applicable legal principles.

The law

8 The court’s ability to supervise the conduct of arbitration proceedings and interfere with the outcome of those proceedings is limited. It is well established that the principle of party autonomy is to be given priority and that, even if a judge would have come to a different conclusion from that of the arbitrator, that is not, in itself, a reason to set aside the award or allow an appeal to be brought against it. The court may, however, under s 16(1) of the Act remit matters arising in the arbitration to the arbitrator for reconsideration. Further, under s 17(2) of the Act, where the arbitrator has misconducted himself or the proceedings, the court may set aside the award. A finding that the arbitration has been misconducted does not imply any moral turpitude on the part of the arbitrator. As Halsbury’s Laws of Singapore vol 2 (Butterworths Asia, 1998) (“Halsbury’s”) para 20.127 indicates, in arbitration, “misconduct” denotes irregularity, such as failing to observe the rules of natural justice or taking steps that amount to a procedural mishap, like examining one party in the absence of the other or questioning a party and basing part of the award on the answers given, even though the agreement of the parties had been to make an award based on documents only. Halsbury’s also points out that “[n]ot all procedural irregularity warrants a finding of misconduct – the failure must have caused a miscarriage of justice”.

9 As regards leave to appeal to the court under s 28 of the Act, the principles to be applied are well known. They emanate from Pioneer Shipping Ltd v BTP Tioxide Ltd [1982] AC 724 (“The Nema”) and the Court of Appeal decision of Hong Huat Development Co (Pte) Ltd v Hiap Hong & Co Pte Ltd [2000] 2 SLR 609, and have been further clarified in the recent Court of Appeal decision of Northern Elevator Manufacturing Sdn Bhd v United Engineers (Singapore) Pte Ltd (No 2) [2004] 2 SLR 494 (“the Northern Elevator case”). The first point to be made is that, as stated in s 28(1) of the Act, the court cannot set aside an award because there has been an error of law on the face of the award. Nor does an error of law give rise to a right of appeal. It is only when there is a question of law that arises from the award that leave to appeal is permissible. In the Northern Elevator case, the Court of Appeal (per Choo Han Teck J at [19]) held:

[A] “question of law” must necessarily be a finding of law which the parties dispute, that requires the guidance of the court to resolve. When an arbitrator does not apply a principle of law correctly, that failure is a mere “error of law” (but more explicitly, an erroneous application of law) which does not entitle an aggrieved party to appeal.

This holding was an endorsement of the statement of the law by G P Selvam JC in Ahong Construction (S) Pte Ltd v United Boulevard Pte Ltd [2000] 1 SLR 749 at [7]:

A question of law means a point of law in controversy which has to be resolved after opposing views and arguments have been considered. It is a matter of substance the determination of which will decide the rights between the parties. … If the point of law is settled and not something novel and it is contended that the arbitrator made an error in the application of the law there lies no appeal against that error for there is no question of law which calls for an opinion of the court. [emphasis added]

By reason of the foregoing authorities, it would seem that, in Singapore, the view of Robert Goff J in Italmare Shipping Co v Ocean Tanker Co Inc (The Rio Sun) [1981] 2 Lloyd’s Rep 489 that it does not follow that “simply because there is no dispute as to the general law, the application of the law to the facts cannot itself raise a question of law” (at 492) has been rejected.

10 As discussed in The Nema, there are two types of questions of law that can arise from an arbitration award. The first is a question relating to the proper construction of a contract, because English law (and thus Singapore law too) regards the interpretation of a written document as being a question of law rather than a question of fact. When such a question arises, how the court approaches it depends on whether the contract is a “one-off” contract or a standard-form contract. In the first case, leave to appeal will only be given if it is apparent upon a...