Woh Hup (Pte) Ltd and Another v Turner (East Asia) Pte Ltd

• Jurisdiction: Singapore
• Judgment Date: 14 January 1986
• Date: 14 January 1986
• Docket Number: Suit No 3599 of 1985
• Court: High Court (Singapore)

Woh Hup (Pte) Ltd and another

Plaintiff

and

Turner (East Asia) Pte Ltd

Defendant

[1986] SGHC 3

F A Chua J

Suit No 3599 of 1985

High Court

Arbitration–Stay of court proceedings–Defendant applying for stay of proceedings on basis that contract contained arbitration clause–Defendant resident within jurisdiction–Whether stay should be granted on condition that defendant provide security–Whether Court has power to impose conditions when granting stay of proceedings under s 7 Arbitration Act (Cap 16, 1970 Rev Ed)–Civil Procedure–Summary judgment–Claim by subcontractor against main contractor for sums outstanding on subcontract–Whether value of subcontractor's outstanding claims sufficiently established–Order 14 r 1 The Rules of the Supreme Court 1970

The defendant (“Turner”) was appointed the main contractor for a development (“the Gateway Project”), and subcontracted some of the works on the Gateway Project (“the subcontract”) to the plaintiffs (“Woh Hup”). The subcontract between Turner and Woh Hup was terminated after Turner's employment under the main contract was determined. Under cl 21 of the subcontract, upon the determination of the main contract, Woh Hup would be entitled to be paid the value of the subcontract works completed at the date of such determination, calculated according to cl 10. These three appeals arose out of claims brought by Woh Hup against Turner for outstanding sums due under the subcontract totalling some $23m.

Woh Hup initially applied for summary judgment against Turner under O 14 r 1 of The Rules of the Supreme Court 1970 (“the Rules”). Woh Hup's application for summary judgment only related to two out of their four heads of claims against Turner (“heads (i) and (ii)”). Woh Hup was prepared to refer the other two heads of claims against Turner (“heads (iii) and (iv)”) to arbitration provided that Turner furnished adequate security. Turner opposed Woh Hup's application for summary judgment and instead sought an order that all further proceedings be stayed pursuant to s 7 of the Arbitration Act (Cap 16, 1970 Rev Ed) (“the Act”). According to Turner, the parties had, by the subcontract, agreed to refer the present dispute to arbitration.

Both applications were heard by a senior assistant registrar (“the SAR”). The SAR made no order on Woh Hup's application for summary judgment. As regards Turner's application for a stay, the SAR ordered that all further proceedings be stayed pursuant to s 7 of the Act on condition that Turner should furnish security in the form of a banker's guarantee, and that judgment be entered in Woh Hup's favour in default thereof. Woh Hup appealed against the SAR's orders in respect of both the applications, whilst Turner appealed solely against the condition in the SAR's order granting a stay of proceedings.

Held, setting aside both the SAR's orders:

(1) Woh Hup was entitled to summary judgment for heads (i) and (ii). These two sums were indisputably due. According to cl 21 of the subcontract, in the case of determination of the subcontract, not the full subcontract sum was payable but only the value of works up to the point of determination. The value of the subcontract works completed at the date of the determination of the subcontract for heads (i) and (ii) had already been calculated. It was not the case that these works had to be revalued on determination of the subcontract as if they were variations: at [24], [25], [30], [31] and [44].

(2) Conversely, Woh Hup's claims under heads (iii) and (iv) should go for arbitration and there should be a stay of proceedings in respect of those two heads of claims. A thorough investigation needed to be made regarding these heads of claims as Turner's allegations in this regard were neither vague nor general: at [54].

(3) The stay of proceedings in respect of heads (iii) and (iv) would be granted without condition. The exercise of the jurisdiction to stay proceedings was discretionary, but if the court was satisfied that there was no sufficient reason why the matter should not be referred to arbitration in accordance with an arbitration agreement, the court would seldom refuse a stay. The court's power to impose conditions when granting leave to defend was expressly provided for under O 14 of the Rules. However, where the court granted a stay of proceedings under s 7 of the Act, no such power was provided at all. Woh Hup cited no authority in which a stay of proceedings was granted on condition that the defendant provided security for the sum claimed when the party seeking the arbitration was not a foreigner: at [53], [56], [60]and [61].

Bjornstad and The Ouse Shipping Co,Re [1924] 2 KB 673 (distd)

Ellis Mechanical Services Ltd v Wates Construction Ltd (1976) 2 Build LR 57; [1978] 1 Lloyd's Rep 33 (folld)

Arbitration Act (Cap 16, 1970Rev Ed)s 7 (consd)

Rules of the Supreme Court 1970, TheO 14r 1 (consd)

Arbitration Act1889 (c 49) (UK) s 5

Giam Chin Toon (Wee Swee Teow & Co) for the plaintiff

Wong Meng Meng (Shook Lin & Bok) for the defendant.

Judgment reserved.

F A Chua J

1 There are three appeals against the decisions of the senior assistant registrar given on 20 August 1985. These appeals arise out of the claims by the plaintiffs against the defendants for sums due under a building subcontract totalling $23,150,331.

2 The plaintiffs are a joint-venture firm engaged in the building works required in the construction of a development known as the Gateway project. The defendants were building contractors engaged as the main contractors for the construction of the Gateway project development and whose employer under the main contract was Gateway Land (“the employer”). By a subcontract dated 2 November 1983 (“the subcontract”) supplemental to the main contract the plaintiffs agreed to carry out and complete the subcontract works in accordance with the subcontract documents, upon the terms and conditions contained therein. The plaintiffs' accepted tender sum for the subcontract works was $45,620,000.

3 The subcontract works essentially comprised the following:

1. (a) air-conditioning and mechanical ventilation services;

2. (b) electrical services;

3. (c) plumbing and sanitary services; and

4. (d) fire services.

4 The plaintiffs duly commenced the subcontract works and proceeded with the same, receiving interim payments from the defendants from time to time. By letter dated 3 January 1985, the defendants informed the plaintiffs that the amount payable under certificate number 18 issued by the architects dated 14 December 1984, had been withheld from the defendants by the employer and that as soon as the defendants had received the amounts due from the employer they would forward to the plaintiffs the amounts certified by the architects for payment to the plaintiffs. By letter dated 19 January 1985, the defendants informed the plaintiffs that they had formally rescinded the main contract on 18 January 1985, on the advice of their lawyers. By letter dated 5 February 1985, to the plaintiffs the defendants confirmed that the main contract had been determined. Consequently the subcontract was determined with effect from 18 January 1985. In April 1985 the plaintiffs commenced the present proceedings against the defendants.

5 On 2 May 1985 the plaintiffs applied for summary judgment under O 14 r 1 to be entered against the defendants for the sum of $23,150,331 and $700 costs. On 8 May 1985, the defendants applied for an order that all further proceedings in the action be stayed pursuant to s 7 of the Arbitration Act (Cap 16, 1970 Rev Ed), the plaintiffs and the defendants having by the subcontract agreed to refer to arbitration the matter in respect of which this action is brought, and for costs.

6 The two applications were heard together by the senior assistant registrar and, after two days of hearing, on 20 August 1985, he made no order on the application of the plaintiffs for summary judgment under O 14 r 1, and on the application of the defendants he ordered that all further proceedings in this action be stayed pursuant to s 7 of the Arbitration Act on condition that the defendants furnish within 30 days from 20 August 1985, security in the form of a banker's guarantee for the sum of $7.5m, in default thereof judgment be entered for the plaintiffs in that sum and that the costs of and occasioned by the action be reserved with liberty to the parties to restore the application.

7 The plaintiffs now appeal against both orders and the defendants appeal against the condition in the second order.

Application under O 14 r 1

8 The plaintiffs say that their claim for summary judgment totalling $23,150,331 is made up as follows:

(a) a sum of $1,822,724 which is the amount included in certificate number 18 issued by the architects dated 14 December 1984;

(b) a sum of $2,696,457 which is the amount included in certificate number 19 issued by the architects dated 15 January 1985;

(c) a sum of $2,007,012...