Sembawang Engineering Pte Ltd v Priser Asia Engineering Pte Ltd

• Jurisdiction: Singapore
• Judge: Lim Teong Qwee JC
• Judgment Date: 03 July 1992
• Neutral Citation: [1992] SGHC 182
• Docket Number: Originating Summons No 206 of 1992
• Date: 03 July 1992
• Year: 1992
• Published date: 19 September 2003
• Plaintiff Counsel: Latiff Ibrahim and Tan Lay Pheng (Khattar Wong & Partners)
• Citation: [1992] SGHC 182
• Defendant Counsel: YC Yang (Murphy & Dunbar)
• Court: High Court (Singapore)
• Subject Matter: s 388 Companies Act (Cap 50, 1990 Ed),Plaintiff company impecunious,Security,Security for costs,Civil Procedure,Costs,s 27 Arbitration Act (Cap 10),Arbitration proceedings,Arbitration,Court's discretion to order security for costs,O 23 Rules of the Supreme Court 1970,Factors to be considered

By a contract dated 12 August 1989 (`the contract`) and made between the above-named Sembawang Engineering Pte Ltd (`Sembawang`) and Priser Asia Engineering Pte Ltd (`Priser`), Priser agreed, subject to the conditions of contract attached to the contract, to execute and complete the design, supply, installation, testing and commissioning of the electrical system (`the works`) for the Qatar General Petroleum Corp Living Quarters Platform (`the platform`) for $800,000. The platform was under construction by Sembawang at its yard in Singapore for delivery in the Gulf. The completion date for the works was 6 November 1989.

Priser commenced execution of the works in August 1989. Variations were ordered from time to time. Serious delay was encountered and on 6 November 1989 the works were not completed. The platform was originally scheduled to leave Singapore in January 1990 but eventually left on 28 February 1990. Priser did not complete the works by that date.

Paragraph 21 of the conditions of contract provide:

Terms of payment

Payment shall be made to [Priser] by progress payment 30 days after the receipt of invoice of work completed for the month, but subject to the percentage of work completed as certified by the engineer less 10% of the amount being retention fee, which shall be deemed payable after 12 (twelve) months from the date of issue of acceptance certificate and the provision of paras 6, 7 and 8 of standard conditions of contract and contract document Pt A.

I was informed from the Bar that no engineer was appointed for the purpose of the contract and no certificates were issued. Priser has issued six invoices, four of which Sembawang has paid. The particulars are:

Date Invoice No Amount Date of payment

28 August 1989 438/89 $81,144.90 31 October 1989

30 September 1989 441/89 $138,344.40 22 December 1989

31 October 1989 444/89 $192,537.00 13 January 1990

30 November 1989 448/89 $135,476.10 (Not paid)

30 December 1989 449/89 $71,551.80 8 March 1990

31 January 1990 452/89 $88,913.30 (Not paid)

It will be seen that the first progress payment was made more than 30 days after the invoice date. On 25 October 1989 Keppel Finance Ltd (`Keppel`) gave notice to Sembawang that Priser had assigned to it `all moneys owing by [Sembawang] in respect of all present and future jobs` and requested that all future payments for the account of Priser be made to Keppel. Following this, Sembawang made payment to Keppel in respect of invoice Nos 441/89, 444/89 and 449/89. Invoice No 438/89 was paid direct to Priser. Invoice No 448/89 was indorsed by Sembawang without any qualification but has not been paid. Invoice No 452/89 has not been indorsed by Sembawang.

By writ issued on 30 April 1990, Priser sued for the amount claimed to be payable under invoice No 448/89 but the action was stayed in view of a provision for arbitration in the contract. In December 1990 arbitration proceedings were commenced. Priser`s points of claim run into 50 paragraphs and a two-page appendix. Sembawang`s defence and counterclaim run into 51 paragraphs and 28 pages of annexures. The reply and defence to counterclaim run into 42 paragraphs. By a direction made by the arbitrator on 28 February 1992, the hearing will begin on 12 October 1992 and will continue until completion.

On 9 March 1992 Sembawang applied to court for an order for Priser to provide security for costs. The application was heard on 19 June 1992, and at the conclusion, I dismissed it with costs. I intimated to counsel that I would give my reasons later.

Jurisdiction

The application was made pursuant to s 27 of the Arbitration Act (Cap 10) and s 388 of the Companies Act (Cap 50, 1990 Ed). Section 27(1) of the Arbitration Act provides:

The Court shall have, for the purpose of and in relation to a reference, the same power of making orders in respect of any of the matters set out in the Second Schedule as it has for the purpose of and in relation to an action or matter in the court: ....

One of the matters set out in the Second Schedule is security for costs.

Section 338(1) of the Companies Act provides:

Where a corporation is plaintiff in any action or other legal proceeding the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the company will be unable to pay the costs of the defendant if successful in his defence, require sufficient security to be given for those costs ....

Mr Latiff, counsel for Sembawang, submitted that on the evidence there was sufficient reason to believe that Priser would be unable to pay the costs of Sembawang if Sembawang were successful in its defence in the arbitration proceedings and accordingly, there was jurisdiction to make an order for security for costs. He referred to Gateway Land Pte Ltd v Turner (East Asia) Pte Ltd [1988] 1 MLJ 416 and Bilcon Ltd v Fegmay Investments Ltd. [1966] 2 All ER 513

In Gateway Land v Turner [1988] 1 MLJ 416 there was an application for security for costs in relation to arbitration proceedings. But the question of jurisdiction was not raised and the application was dealt with on its merits. In Bilcon v Fegmay Investments [1966] 2 All ER 513 Fegmay Investments were respondents in arbitration proceedings and applied for an order for security for costs against Bilcon, the claimant, on the ground that it was insolvent. Nield J, at p 514, said:

I deal first with the question of the court`s jurisdiction. The two special circumstances which together produce the problem in this regard are that the proceedings here are an arbitration under the Arbitration Act 1950, and that the claimants are a limited

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