Source: http://archive-sg.com/sg/s/singaporelaw.sg/2016-01-30_7413359_77/Joseph_Mathew_and_Another_v_Singh_Chiranjeev_and_Another_2009_SGCA_51/
Timestamp: 2017-09-26 16:27:53
Document Index: 691245254

Matched Legal Cases: ['EWCA ', 'Art 34', 'Art 34', 'Arts 34', 'Art 34', 'Art 34', 'Art 34', 'Art 34', 'Art 16', 'Art 16', 'Art 34', 'Art 16', 'Art 16', 'Art 34', 'Art 34', 'Art 34', 'Art 34', 'Art 34', 'Art 34', 'Art 34', 'Art 34', 'Art 34', 'Art 34', 'Art 34', 'Art 34', 'Arts 34', 'Art 16', 'Art 34', 'Art 16', 'Art 34']

archive-sg.com: singaporelaw.sg - Joseph Mathew and Another v Singh Chiranjeev and Another[2009] SGCA 51
Joseph Mathew and Another v Singh Chiranjeev and Another[2009] SGCA 51
above at 18 as well as the Judgment at 29 An agreement to grant an option can be enforced if all the essential terms have been agreed upon and the requirement that the terms be evidenced in writing has been satisfied we will consider the relevant statutory requirements in the next part of this judgment In this regard the relevant e mail correspondence centring on the four key e mails is of the first importance This has in fact been set out above at 5 8 However counsel for the appellants Mr Leslie Netto argued that the appellants understanding was that they were only to be bound upon signing the Option to Purchase If the appellants were arguing that their signatures on the Option to Purchase were necessary as a condition precedent to a binding agreement arising between them and the respondents for the grant of an option it is clear in particular from the Third E mail reproduced above at 7 and discussed in the next paragraph that this was not the case Indeed the need to courier the Option to Purchase to the appellants for their signature was merely a necessary part of the process of giving effect to a binding agreement to grant an option that had already been entered into between the appellants and the respondents Let us elaborate on the reasons why we found that a binding agreement to grant an option had indeed been entered into between the appellants and the respondents 20 There is clear evidence based on the e mail correspondence between Helene and the first appellant that the parties had indeed entered into a valid contract for the grant of an option for the sale of the Property In particular the Third E mail reproduced above at 7 from the first appellant to Helene as his and the second appellant s agent is especially instructive having regard to the fact that there had been a clear offer by the respondents to the appellants through Helene as their agent to purchase the Property for 506 000 Contrary to what the appellants had argued before this court this represented the end point and not the initial stage or trigger point of the contractual process We pause to note that although the second appellant did not communicate her acceptance of the offer to the respondents directly the first appellant was acting as her agent as implied from the second appellant s conduct The second appellant in her Affidavit of Evidence in Chief admitted that she left it to the first appellant to handle the matter of finding a buyer She even reminded the first appellant to check thoroughly before sending any mail to Helene What she did not give the first appellant authority to do was to sign the option on her behalf However as already mentioned the issue in this appeal is whether there was a binding contract to grant an option for the sale of the Property Returning to the issue as to whether or not there was a binding contract to grant an option for the sale of the Property in the Third E mail the first appellant stated that he was taking a decision to proceed to sell the property at this price of S 506K The first appellant was also aware of all the other terms relating to the option to be granted which were in fact contained in the First E mail reproduced above at 5 In this particular e mail viz the Third E mail he instructed Helene to deposit the 1 cheque from the respondents into his bank account Helene duly noted inter alia this instruction in the Fourth E mail and deposited this cheque into the first appellant s bank account accordingly 21 In the circumstances there had not only been the fulfilment of the requisite legal elements of offer and acceptance but there had also clearly been sufficient consideration furnished by the respondents to the appellants as well in so far as the promise by the latter to grant an option to purchase the Property was concerned and on the current status and possible future of the doctrine of consideration see generally the decision of this court in Gay Choon Ing v Loh Sze Ti Terence Peter 2009 2 SLR 332 In this regard we agree with the Judge s conclusion that the contract to grant an option for the sale for the Property was binding between the parties when at the latest the 1 cheque had been deposited into the first appellant s bank account simply because the requirements for the formation of a valid contract offer and acceptance as well as consideration would have been fulfilled at this particular point in time Needless to say the final requirement relating to the formation of a valid and binding contract viz an intention to create legal relations was also present at this particular point in time 22 The legal result in our view was clear The first appellant and the second appellant on whose behalf as the Judge correctly in our view found the first appellant had been acting see the Judgment at 25 and above at 20 had entered into a legally valid as well as binding contract with the respondents to the effect that an option would be granted to the latter to purchase the Property The terms of the option to be granted were clear as well as unambiguous and the subsequent signing of the option was a mere formality Not surprisingly therefore the Judge in fact ordered the appellants to grant an option to the respondents to purchase the Property for the stated price of 506 000 and that if the appellants refused to do so the Registrar should have the power to sign and grant the option to the respondents on the appellants behalf see above at 16 as well as the Judgment at 42 We understand in fact that completion of the sale and purchase of the Property was at the time of the hearing before this court imminent Nevertheless this was not an end to the matter In order to be enforceable by the respondents the contract had to comply with the statutory formalities pursuant to s 6 d which reads as follows Contracts which must be evidenced in writing 6 No action shall be brought against d any person upon any contract for the sale or other disposition of immovable property or any interest in such property unless the promise or agreement upon which such action is brought or some memorandum or note thereof is in writing and signed by the party to be charged therewith or some other person lawfully authorised by him 23 Before we turn to consider this particular issue it should be noted that s 6 d is applicable in the present appeal because an option creates in favour of the option holder an equitable interest in the land see the decision of this court in Ong Chay Tong Sons Pte Ltd v Ong Hoo Eng 2009 1 SLR 305 at 75 the Singapore High Court decisions of Eng Bee Properties Pte Ltd v Lee Foong Fatt 1993 3 SLR 837 at 26 and Ho Seek Yueng Novel v J V Development Pte Ltd 2006 2 SLR 742 at 52 as well as Martin Dray and Adam Rosenthal Barnsley s Land Options Sweet Maxwell 4th Ed 2005 at pp 51 53 Were the requirements under section 6 d of the Civil Law Act satisfied The applicable principles 24 Section 6 d is of course an important and well known one having its genesis in s 4 of the UK Statute of Frauds 1677 Cap 3 the 1677 UK Act which was later re enacted in the UK in substantially the same form in s 40 of the UK Law of Property Act 1925 Cap 20 the 1925 UK Act and for the legal position in Singapore prior to the introduction of s 6 d during which time in essence s 4 of the 1677 UK Act applied see Cheshire Fifoot and Furmston s Law of Contract 2nd Singapore and Malaysian Ed Butterworths Asia 1998 at p 356 It should be noted that the current legal regime in the UK context is with effect from 27 September 1989 no longer the same and unlike the Singapore position is governed by the UK Law of Property Miscellaneous Provisions Act 1989 Cap 34 the 1989 UK Act in which inter alia contracts for the sale of land or other disposition of an interest in land must themselves be in writing see s 2 of the 1989 UK Act 25 As can be seen s 6 d reproduced above at 22 comprises a number of requirements 26 In so far as the specific contents of a sufficient note or memorandum within the meaning of s 6 d are concerned the following observations by Prof Furmston in Cheshire Fifoot and Furmston s Law of Contract Oxford University Press 15th Ed 2007 Cheshire Fifoot and Furmston at p 271 are apposite The agreement itself need not be in writing A note or memorandum of it is sufficient provided that it contains all the material terms of the contract Such facts as the names or adequate identification of the parties the description of the subject matter the nature of the consideration comprise what may be called the minimum requirements emphasis added Reference may also be made to Kevin Gray and Susan Francis Gray Elements of Land Law Oxford University Press 5th Ed 2009 Gray and Gray at para 8 1 26 as well as G H Treitel The Law of Contract Sweet Maxwell 7th Ed 1987 Treitel at p 140 it should be noted that later editions of this last mentioned work consider only the 1989 UK Act as to which see above at 24 It should be noted that Prof Treitel also observes as follows see Treitel at pp 141 142 The memorandum need not be prepared for the purpose of satisfying the statutory requirements of written evidence A writing which comes into existence before an action is brought on the contract will suffice so long as it acknowledges or recognises the existence of the contract 27 Section 6 d can also be satisfied by a joinder of several documents As Prof Furmston observes Cheshire Fifoot and Furmston 26 supra at p 274 The framers of the Statute of Frauds clearly contemplated the inclusion of all the contractual terms in a single document But here again the judges in their anxiety to protect honest intentions from the undue pressure of technicality have departed widely from the original severity of the statute The reports reveal a progressive laxity of interpretation emphasis added Reference may also be made to Treitel 26 supra at pp 142 143 in particular the learned author observes as follows at p 142 Where no single document fully records the transaction it may be possible to produce a sufficient memorandum by joining together two or more documents Joinder is in the first place possible where one document expressly or impliedly refers to another transaction If that transaction is also recorded in a document and that document was in existence when the first was signed the two documents can be joined Even where the first document contains no reference to the second the two can be joined if on placing them side by side it becomes obvious without the aid of oral evidence that they are connected But if the document signed by the defendant contains no reference to another document or transaction and if the connection between the two documents can only be established by oral evidence joinder is not permitted emphasis in original 28 Next and more specifically there is the important requirement in s 6 d that the note or memorandum be in writing 29 Yet another requirement in s 6 d is that the note or memorandum must be signed In this regard the observations by Prof Furmston once again are apposite see Cheshire Fifoot and Furmston 26 supra at p 273 The word signature has been very loosely interpreted In the first place it need not be a subscription that is to say it need not be at the foot of the memorandum but may appear in any part of it from the beginning to the end In the second place it need not in the popular sense of the word be a signature at all A printed slip may suffice if it contains the name of the defendant The relaxation of the statutory language was well established a hundred years ago and offers a striking instance of the way in which legislation may be overlaid by judicial precedent emphasis added Reference may also be made to Treitel 26 supra at p 141 as well as to the following observations by Prof Pettit see P H Pettit Farewell Section 40 1989 Conv 431 at 439 Pettit The courts have been at their most generous in interpreting the meaning of a signature under section 40 of the 1925 UK Act In Caton v Caton 1867 LR 2 HL 127 Lord Westbury pointed out that the section required a signing and not a subscribing and accordingly did not need to be at the end or any particular place in the document Signature in the popular sense of putting pen to paper was not necessary typewriting or print might suffice What was required was that the person signing had to have shown in some way that he recognised the document as an expression of the contract In Caton v Caton Lord Chelmsford said that the signature must be inserted so as to have the effect of authenticating the instrument or so as to govern the whole agreement or so as to govern what follows emphasis added 30 A relevant and important decision in the local context with regard to inter alia both these last mentioned requirements viz relating to writing and signature and which was therefore not surprisingly relied upon by the Judge in the court below is the Singapore High Court decision of SM Integrated Transware Pte Ltd v Schenker Singapore Pte Ltd 2005 2 SLR 651 SM Integrated This case endorsed the general principles noted above in respect of both the basic requirements in relation to the specific contents of a sufficient note or memorandum within the meaning of s 6 d see above at 26 as well as the joinder of documents see above at 27 see generally SM Integrated at 72 and 73 respectively In addition one of the issues which arose in this case was whether because the Electronic Transactions Act Cap 88 1999 Rev Ed ETA did not apply to the contract concerned pursuant to the exclusion under s 4 1 d of the ETA the e mail correspondence concerned could not be considered to be in writing for the purposes of s 6 d and by the same token whether as another issue such correspondence could not constitute a sufficient signature for the purposes of the same provision if the proposition just mentioned holds good If of course the ETA was applicable there would have been no problems fulfilling the requirements under s 6 d inasmuch as the ETA enables electronic records and signatures to satisfy the legal requirements for both writing and signature 31 Judith Prakash J held in SM Integrated 30 supra that e mail correspondence could indeed be considered to be in writing and could also satisfy the requirements for a signature for the purposes of section 6 d in particular the learned judge observed thus at 76 Whilst the statute viz the ETA does make it plain that electronic records will be adequate to satisfy legal rules relating to writing and signature in most commercial matters its conservative approach in not extending these provisions to contractual matters falling within s 6 of the CLA Civil Law Act does not mean that as a matter of law electronic means of communication cannot satisfy the requirements of s 6 The ETA does not change the common law position in relation to s 6 of the CLA Whether an e mail can satisfy the requirements for writing and signature found in that provision will be decided by construing s 6 d of the CLA itself and not by blindly relying on s 4 1 d of the ETA This is a view that has supporters As part of their review of the ETA on 25 June 2004 the Infocomm Development Authority of Singapore and the Attorney General s Chambers released a public consultation paper dealing with the exclusions under s 4 of the ETA Paragraphs 2 1 3 and 2 1 5 of the consultation paper state 2 1 3 The effect of section 4 is that in such excluded transactions one cannot rely on the provisions in the ETA that enable electronic records and signatures to satisfy legal requirements for writing and signature For example sections 6 and 7 of the Civil Law Act impose legal requirements for writing and signature in the case of certain land transactions and for trusts respectively 2 1 5 Even where legal form requirements apply exclusion under section 4 of the ETA may not necessarily prevent such transactions from being done electronically Electronic records or signatures could still possibly satisfy the legal requirements without reliance on the provisions of the ETA It would be a matter for legal interpretation whether an electronic form satisfies a particular legal requirement for writing or signature Some legislative provisions by reason of their detailed specifications would clearly exclude the use of electronic means even if the ETA were applicable emphasis in bold in original 32 Indeed in addition to the views expressed in the preceding paragraph it is imperative to have recourse to first principles in particular the purpose for which s 4 of the ETA was enacted see also generally s 9A of the Interpretation Act Cap 1 2002 Rev Ed which embodies of course the purposive approach which now governs the interpretation of statutes in the Singapore context see further the Singapore High Court decision of PP v Low Kok Heng 2007 4 SLR 183 The purpose of s 4 of the ETA is in fact referred to in the views expressed in the consultation paper entitled Joint IDA AGC Review of Electronic Transactions Act Stage II Exclusions Under Section 4 of the ETA Consultation Paper LRRD No 2 2004 which views were cited in SM Integrated and which are to be found in the preceding paragraph The following views expressed by the Minister for Trade and Industry Mr Lee Yock Suan during the Second Reading of the Electronic Transactions Bill should also be noted see Singapore Parliamentary Debates Official Report 29 June 1998 vol 69 at col 254 As e commerce is still in an early stage of development we foresee a period of time before the international scene settles down As such the provisions of the Bill should not at this time go so far as to require recognition of electronic signatures and documents in place of physical forms entirely There are certain classes of documents or transactions that may not be ready for such an immediate change Hence insofar as Part II and Part IV of the Bill are concerned it is provided in clause 4 that in certain matters such as wills and documents of title the electronic records signatures and contract provisions do not apply This does not however prevent the courts from recognising the use of electronic documents in these matters on a case by case basis Eventually when public confidence in electronic transactions grows the Bill may be widened to include such documents emphasis added 33 As a passing observation however it might be argued that the provisions of the ETA are not exhaustive in the first instance and that there was perhaps no pressing reason therefore for the exceptions contained in s 4 of the ETA to be enacted in the first place For example s 6 of the ETA states that f or the avoidance of doubt it is declared that information shall not be denied legal effect validity or enforceability solely on the ground that it is in the form of an electronic record emphasis added Section 11 of the ETA states as follows Formation and validity of contracts 11 1 For the avoidance of doubt it is declared that in the context of the formation of contracts unless otherwise agreed by the parties an offer and the acceptance of an offer may be expressed by means of electronic records 2 Where an electronic record is used in the formation of a contract that contract shall not be denied validity or enforceability on the sole ground that an electronic record was used for that purpose emphasis added 34 Further s 12 of the ETA reads as follows Effectiveness between parties 12 As between the originator and the addressee of an electronic record a declaration of intent or other statement shall not be denied legal effect validity or enforceability solely on the ground that it is in the form of an electronic record emphasis added 35 It will be seen that the provisions just cited are by no means exhaustive and are intended to ensure that electronic records do not become legal obstacles to the validity and effectiveness vis à vis the formation of contracts or actions associated therewith 36 More pertinently in the context of the present case s 7 of the ETA s 7 states as follows Where a rule of law requires information to be written in writing to be presented in writing or provides for certain consequences if it is not an electronic record satisfies that rule of law if the information contained therein is accessible so as to be usable for subsequent reference emphasis added 37 Whilst s 7 of the ETA does suggest that an electronic record which falls within the purview of the ETA would have otherwise satisfied the requirements under s 6 d there is nothing in that particular provision which suggests that if s 7 of the ETA is not applicable in this instance because of the exception contained in s 4 of the ETA an electronic record is thereby irrelevant in so far as the satisfaction of the requirements under s 6 d is concerned Indeed there is nothing in s 7 of the ETA to suggest that the requirements under s 6 d could not be satisfied by other means whether electronic or otherwise All that s 7 of the ETA states is that if the ETA is applicable which however is not the case here then an electronic record would satisfy inter alia the requirements under s 6 d if the information contained therein is accessible so as to be usable for subsequent reference All this merely buttresses the conclusion which we have already arrived at to the effect that electronic records in general and the e mails in this case in particular are relevant notwithstanding the fact that Parts II and IV of the ETA are not applicable to contracts such as those involved in the present appeal 38 Indeed the recognition of electronic records including e mails as satisfying the requirement of writing under s 6 d is in our view entirely consistent with the purpose underlying that particular provision itself The general purpose of s 6 d itself as already noted earlier at 24 can be traced back to its English antecedents originating in s 4 of the 1677 UK Act In this regard it is important to note that s 4 of the 1677 UK Act was enacted as its preamble states f or Prevention of many fraudulent Practices which are commonly endeavoured to be upheld by Perjury and Subornation of Perjury Indeed after referring to this preamble Lord Simon of Glaisdale in the House of Lords decision of Steadman v Steadman 1976 AC 536 Steadman observed thus at 558 The mischief for which the statute was providing a remedy was therefore that some transactions were being conducted orally in such a way that important interests were liable to be adversely affected by a mode of operation that invited forensic mendacity The remedy was to require some greater formality in the record of such transaction than mere word of mouth if it was to be enforced The continuing need for such a remedy for such a mischief was apparently recognised as subsisting when the law of landed property was recast in 1925 As Prakash J aptly put it in SM Integrated 30 supra at 80 The aim of the Statute of Frauds was to help protect people and their property against fraud and sharp practice by legislating that certain types of contracts could not be enforced unless there was written evidence of their existence and their terms Recognising electronic correspondence as being writing for the purpose of s 6 d of the CLA would be entirely consonant with the aim of the CLA and its predecessor the Statute of Frauds as long as the existence of the writing can be proved We also agree with the following observations of the learned judge at 85 I therefore find that the e mail correspondence which constituted the memorandum of the contract as specified in 73 above was in writing for the purpose of s 6 d I am pleased to be able to come to this conclusion which I think is dictated by both justice and common sense since so much business is now negotiated by electronic means rather than by letters written on paper and in the future the proportion of business done electronically will only increase I think that the ordinary man in the street who not only conducts business via computer but who is being encouraged to use technology in all areas of life and to become more and more technologically proficient would be amazed to find that the law would not recognise a contract he had made electronically even though all the terms of the contract had been agreed and the parties were perfectly ad idem If parties who negotiate electronically do not wish to be bound until a formal document is signed they can have recourse to the subject to contract endorsement that can easily be added to their e mail correspondence 39 Prakash J also endorsed the more flexible approach adopted above as to what constitutes a sufficient signature within the meaning of s 6 d see 31 above After considering a couple of US decisions viz Shattuck v Klotzbach 14 Mass L Rep 360 2001 and Cloud Corporation v Hasbro Inc 314 F 3d 289 2002 the learned judge expressed the following views with regard to the approach to be adopted in the context of e mails see SM Integrated 30 supra at 91 93 91 I am satisfied that the common law does not require handwritten signatures for the purpose of satisfying the signature requirements of s 6 d of the CLA A typewritten or printed form is sufficient In my view no real distinction can be drawn between a typewritten form and a signature that has been typed onto an e mail and forwarded with the e mail to the intended recipient of that message 92 One minor difficulty in this case is that Mr Tan did not append his name at the bottom of any of his e mail messages All his e mail messages however including the message dated 4 February 2003 and sent to Ms Yong had near the start thereof a line reading From Tan Tian Tye Mr Tan confirmed in court that he had sent out those messages There is no doubt that at the time he sent them out he intended the recipients of the various messages to know that they had come from him Despite that he did not find it necessary to identify himself as the sender by appending his name at the end of any of the e mails whether the messages were sent to his colleagues or to third parties like Mr Heng I can only infer that his omission to type in his name was due to his knowledge that his name appeared at the head of every message next to his e mail address so clearly that there could be no doubt that he was intended to be identified as the sender of such message Therefore I hold that the signature requirement of s 6 d is satisfied by the inscription of Mr Tan s name next to his e mail address at the top of the e mail of 4 February 2003 93 I recognise that one person s e mail facility can in some cases be accessed by a third party who can then send out messages which purport to be authentic messages from the owner of that e mail address If that happened the owner of the address would be entitled to dispute the authenticity of the messages purportedly sent by him That is not the case here Further such dispute would be as to the person who initiated the message and would not be decided on the basis of whether the message bore a signature emphasis in bold in original 40 We agree with the reasoning set out in the preceding paragraph especially bearing in mind the fact that the requirement of a signature under s 6 d is a flexible one provided that it is clear that the document or documents concerned emanated from the person or persons signing them Our decision 41 It was clear in our view that all the requirements under s 6 d were in fact satisfied in the present case 42 In so far as the specific contents of the note or memorandum were concerned the parties the price and the description of the subject matter viz the Property were all clearly stated In this last mentioned regard we agree with the Judge that the Property was fully identified in Helene s writing on the back of the 1 check see the Judgment at 34 43 That the relevant e mails could be viewed together as the Judge did by way of a joinder of several documents is also clear 44 Further the e mails noted at 5 8 above clearly satisfied the requirement that the note or memorandum be in writing within the meaning of s 6 d 45 Finally the requirement of a signature under s 6 d had also been satisfied on the facts of the present case that this was so was in fact clear on the face of the relevant e mails themselves 46 This was in fact a very straightforward case inasmuch as all the requirements under s 6 d were clearly satisfied on the facts The doctrine of part performance Is the doctrine of part performance part of Singapore law 47 The Judge also held that even if s 6 d had not been satisfied the doctrine of part performance part performance would nevertheless apply in the respondents favour see the Judgment at 39 40 48 Part performance is of course an exception to the requirements under s 6 d It is equitable in origin and was intended to prevent inter alia this very statutory provision from itself being utilised as an engine of fraud and see eg Steadman 38 supra at 558 as well as the oft cited observations of Farwell J in the English High Court decision of Broughton v Snook 1938 1 Ch 505 at 513 Indeed Lord Hoffmann in the House of Lords decision of Actionstrength Ltd t a Vital Resources v International Glass Engineering IN GL EN SpA 2003 2 AC 541 Actionstrength observed at 22 that part performance was introduced v ery soon after the 1677 UK Act 49 Part performance has in fact been assumed to apply in the local context see eg the Singapore High Court decision of Midlink Development Pte Ltd v The Stansfield Group Pte Ltd 2004 4 SLR 258 at 66 67 However the precise reasons why the doctrine is applicable in the local context have never been canvassed in detail despite the fact that one writer has argued that the doctrine has been abolished in the light of s 6 d see Barry C Crown Cutting the Apron Strings The Localisation of Singapore s Land and Trust Law 1995 SJLS 75 at 77 81 Crown a view that was reiterated recently by the same author in Back to Basics Indefeasibility of Title under the Torrens System 2007 SJLS 117 at 125 and cf Tan Sook Yee Principles of Singapore Land Law Butterworths Asia 2nd Ed 2001 at p 321 Briefly put the learned author argued that by re enacting s 4 of the 1677 UK Act as s 6 d without expressly preserving part performance the legislature had intended to abolish it In this regard when s 4 of the 1677 UK Act was re enacted as s 40 of the 1925 UK Act a provision expressly preserving part performance was included in s 40 2 of the 1925 UK Act which read as follows This section applies to contracts whether made before or after the commencement of this Act and does not affect the law relating to part performance or sale by the court emphasis added 50 Before proceeding to consider the learned author s argument a preliminary observation is in order Admittedly the mere factual presence of local decisions considering and or applying part performance does not constitute ipso facto a normative justification for the doctrine itself However the presence of such decisions also cannot be ignored as it would not be unreasonable to presume that the courts must have accepted that there was a legal basis for the recognition of the doctrine of part performance in the Singapore context a basis which we will endeavour to articulate expressly in the present judgment 51 Part performance has in fact been subject to criticism in the main that it generates uncertainty This is due in no small measure to the House of Lords decision in Steadman 38 supra which led to a relaxation of the doctrine see also Gray and Gray 26 supra at para 8 1 40 However and turning to the argument by Crown above at 49 the key issue in our view is whether or not part performance otherwise part of Singapore law pursuant to the general reception of English law and now s 3 1 of the Application of English Law Act Cap 7A 1994 Rev Ed the AELA is consistent with s 6 d It is clear that s 6 d did not expressly abolish part performance Could it be argued that part performance was abolished because it had not as Crown argues above at 49 been expressly preserved by a local equivalent of s 40 2 of the 1925 UK Act There are several possibilities One is that there was an omission on the part of the draftsperson The other is that there was a conscious decision on the part of the draftsperson not to include a local equivalent of s 40 2 of the 1925 UK Act Even if we assume that the latter is correct we need to inquire what was in fact the purpose behind the enactment of s 40 2 of the 1925 UK Act in the context of the legal position then existing in the UK itself 52 The legal position in the UK as at 1925 and prior to the enactment of s 40 of the 1925 UK Act encompassed the presence of both s 4 of the 1677 UK Act which the 1925 UK Act repealed and re enacted as s 40 of the same and part performance Leaving aside s 40 2 of the 1925 UK Act for the moment could it be argued
Original URL path: http://www.singaporelaw.sg/sglaw/laws-of-singapore/case-law/free-law/court-of-appeal-judgments/13898-joseph-mathew-and-another-v-singh-chiranjeev-and-another-2009-sgca-51 (2016-01-30)
Ting Siew May v Boon Lay Choo and another
contracts otherwise legitimately entered into between the parties concerned 48 What would constitute a legal wrong that ought in the circumstances to result in the contract concerned being rendered void and unenforceable is an exercise in application which is a basic process that the courts effect on a daily basis This was also recognised by the Privy Council in Vita Food Products Inc v Unus Shipping Co Limited In Liquidation 1939 AC 277 at 293 where Lord Wright observed thus Each case has to be considered on its merits Nor must it be forgotten that the rule by which contracts not expressly forbidden by statute or declared to be void are in proper cases nullified for disobedience to a statute is a rule of public policy only and public policy understood in a wider sense may at times be better served by refusing to nullify a bargain save on serious and sufficient grounds 49 In fact the recognition of contracts entered into with the object of committing an illegal act as void and unenforceable at common law has recently been confirmed by case law itself One such decision is that of the English Court of Appeal in ParkingEye Ltd v Somerfield Stores Ltd 2013 2 WLR 939 ParkingEye and another is the English High Court decision of 21 st Century Logistical Solution v Madysen 2004 2 Lloyd s Rep 92 Madysen There is also an academic antecedent at least in the context of the decision of Madysen in the form of one of the leading articles in the Commonwealth on illegality and public policy published almost half a century ago see M P Furmston The Analysis of Illegal Contracts 1965 1966 16 U Toronto LJ 267 Furmston 50 The relevant part of Furmston for the purposes of the present analysis centres on the learned author s perceptive analysis of inter alia the oft cited English Court of Appeal decision of Alexander v Rayson 1936 1 KB 169 Alexander In Alexander the contract concerned consisted of two separate documents one a lease with the benefit of certain services at a rent of 450 per annum the second requiring payment of 750 per annum for the provision of various services The second document however covered essentially the same services as those embodied in the first document except for the provision and maintenance of a refrigerator The object of this double document arrangement was to reduce the amount of tax payable and thus defraud the revenue authorities 51 The court in Alexander held the contract to be illegal and void Significantly the court recognised as established the principle that the court might refuse to enforce a contract where it appeared that the subject matter of that contract was intended to be used for an unlawful purpose and held that this principle applied equally where the contract itself ie the documents themselves was intended to be used for an unlawful purpose The court articulated the following principles of law see Alexander at 182 It is settled law that an agreement to do an act that is illegal or immoral or contrary to public policy or to do any act for a consideration that is illegal immoral or contrary to public policy is unlawful and therefore void But it often happens that an agreement which in itself is not unlawful is made with the intention of one or both parties to make use of the subject matter for an unlawful purpose that is to say a purpose that is illegal immoral or contrary to public policy The most common instance of this is an agreement for the sale or letting of an object where the agreement is unobjectionable on the face of it but where the intention of both or one of the parties is that the object shall be used by the purchaser or hirer for an unlawful purpose In such a case any party to the agreement who had the unlawful intention is precluded from suing upon it Ex turpi causa non oritur actio The action does not lie because the Court will not lend its help to such a plaintiff emphasis added It is interesting to note that the above principles were followed by Devlin J in Edler 52 The facts and holding of Alexander are straightforward enough but what is interesting is the point made in Furmston that the contract in Alexander was illegal not because it was a contract to defraud the revenue as it did not require any party to do anything which involved a fraud on the revenue and indeed could have been performed without any such fraud Instead it was illegal because of the plaintiff s intention to use the contractual documents to assist in misleading the revenue authorities see Furmston at p 287 53 More generally Prof Furmston observed that it is dangerous to think of illegal contracts as consisting wholly or even mainly of agreements to do acts contrary to the policy of the law and that it is quite clear that agreements which on their face are harmless and which can be performed without infringing any legal rule may still be held illegal see Furmston at pp 285 286 Prof Furmston therefore suggested that Alexander belonged to a class of illegal contracts in which a contract may involve the doing of an act legal in itself but with the intention by one of the parties that it provides the setting for the ultimate effecting of an act contrary to the policy of the law Such a transaction is thus not an illegal contract as such although public policy requires that the transaction be treated as if the contract itself were illegal We observe parenthetically at this juncture that this is precisely the broad category of illegality at common law that we are presently considering and which as we have already noted finds expression by Devlin J in St John Shipping quoted above at 43 54 Also relevant in the context of the present appeal is Prof Furmston s further analysis in this article of the limits of such a category In particular he was of the view that in so far as the contract was concerned it is clear that there must come a point when the connection with the plaintiff s intention is too remote see Furmston at p 287 emphasis added where Prof Furmston had actually drawn upon the reference to the concept of remoteness by du Parcq J at first instance in Alexander itself see Alexander at 171 When in other words does the link between the contract which is legal in itself and the illegal purpose it is supposed to effect become too tenuous 55 It should be noted that it was precisely this passage from Furmston and the point made therein which was cited endorsed and applied by Field J in Madysen Significantly in our view this same passage was also cited by Toulson LJ as he then was with whom Smith and Mummery LJJ agreed in the English Court of Appeal decision of Anglo Petroleum Ltd and another v TFB Mortgages Ltd 2007 All ER D 243 May Anglo Petroleum at 81 This is significant because of Toulson LJ s later judgment in the also English Court of Appeal decision in ParkingEye to which our attention now briefly turns 56 However before proceeding to do so it is important to emphasise that the application of the principle of remoteness is very much a fact centric inquiry One possible factor that could be applied to this inquiry is whether there was any overt step in carrying out the unlawful intention taken in the transaction itself see for example Alexander at 189 This requirement of overt action was one of the factors identified by the commentary in Buckley on Alexander and Madysen which cautioned that it was an important but not necessary condition for a finding of illegality see Buckley at para 7 11 57 Returning to ParkingEye in that case there was a contract for the plaintiff to supply the defendant with an automated parking system at some of its supermarket car parks Under this contract the plaintiff received no payment from the defendant but instead was allowed to retain all the fines collected from the defendant s customers who overstayed their free parking time in the car park 58 In ParkingEye when the plaintiff brought a claim for damages for repudiatory breach of the contract the defendant raised an illegality defence based on false representations made in the demand letters sent by the plaintiff to the defendant s customers The form of the demand letters was not stipulated in the contract but had been drafted by the plaintiff and approved by the defendant before the contract was made The trial judge rejected this defence and found that although the plaintiff had committed the tort of fraud or deceit by deliberately inserting falsehoods into some of the demand letters even though it had not appreciated the potential legal implications of the letters the contract was not tainted by illegality because the approval of the form of the demand letters was collateral and distinct from the main contract 59 The English Court of Appeal comprising Laws and Toulson LJJ as well as Sir Robin Jacob held that the trial judge had rightly rejected the illegality defence since the illegality was neither central to nor necessary for the performance of the contract and to disallow the claim on the ground of illegality would lead to a disproportionate result 60 At first glance it would appear that Toulson LJ and Sir Robin Jacob with whom Laws LJ agreed applied different tests to arrive at the same result in ParkingEye In particular Toulson LJ considered the three factors of a the object and intent of the claimant b the centrality of the illegality and c the nature of the illegality whereas Sir Robin Jacob applied the disproportionate test A closer examination of the judgment in ParkingEye however demonstrates that all three judges in ParkingEye were really in agreement that the general approach of the courts should be to look at the various policy considerations underlying the defence of illegality to assess whether refusal of the remedy sought would be a proportionate response to the illegality 61 Sir Robin Jacob who applied the disproportionate test explained the principle of proportionality as involving the assessment of how far refusal of the remedy furthers one or more of the specific policies underlying the defence of illegality see ParkingEye at 39 Indeed Toulson LJ was very much in agreement that this should be the approach taken towards the application of the illegality defence This is evident from the preliminary sections of Toulson LJ s analysis see ParkingEye at 51 endorsing the following provisional recommendations in the Consultative Report by the Law Commission of England and Wales entitled The Illegality Defence LCCP No 189 2009 The Illegality Defence 2009 at paras 3 142 3 144 3 142 We provisionally recommend that the courts should consider in each case whether the application of the illegality defence can be justified on the basis of the policies that underlie that defence These include a furthering the purpose of the rule which the illegal conduct has infringed b consistency c that the claimant should not profit from his or her own wrong d deterrence and e maintaining the integrity of the legal system Against those policies must be weighed the legitimate expectation of the claimant that his or her legal rights will be protected Ultimately a balancing exercise is called for which weighs up the application of the various policies at stake Only when depriving the claimant of his or her rights is a proportionate response based on the relevant illegality policies should the defence succeed The judgment should explain the basis on which it has done so 3 143 We also consider that it would be helpful if rather than simply asking whether the contract is illegal a term which itself is vague and confusing the courts were to ask whether the particular claimant in the circumstances which have occurred should be denied his or her usual relief in respect of the particular claim This focus on the particular claimant and particular claim are important As we have suggested one of the most important factors bearing on the case will be the closeness of the connection between the claim and the unlawful conduct It may well be the case that it would be a proportionate response to deny the claimant relief in respect of one of the defendant s obligations where this is closely linked to the claimant s unlawful actions but not to any other 3 144 We provisionally recommend that the courts should consider whether illegality is a defence to the particular claim brought by the particular claimant rather than whether the contract is illegal as a whole emphasis in bold in original omitted emphasis in italics added 62 Significantly Toulson LJ also particularly endorsed see ParkingEye at 53 the following statement by Etherton LJ in the English Court of Appeal decision of Les Laboratoires Servier v Apotex Inc 2012 EWCA Civ 593 2013 RPC 21 Les Laboratoires at 75 W hat is required in each case is an intense analysis of the particular facts and of the proper application of the various policy considerations underlying the illegality principle so as to produce a just and proportionate response to the illegality That is not the same as an unbridled discretion emphasis added Toulson LJ then discussed the principle enunciated by Devlin J in St John Shipping that a contract which is entered into with the object of committing an illegal act is unenforceable see above at 43 and enunciated the three factors summarised above at 60 in the context of this principle It thus appears that Toulson LJ s three factors were specific to assessing the proper scope and application of the principle in St John Shipping and certainly did not detract from the general approach addressed earlier that the court should consider the various policy considerations underlying the illegality principle so as to produce a proportionate response to the illegality Indeed in Toulson LJ s conclusion he reiterated that the illegality defence should be rejected in that case since it would not be a just and proportionate response to the illegality emphasis added see ParkingEye at 79 63 It would however appear that remoteness or proximity was the decisive test which was adopted in Madysen as opposed to a test of proportionality In Madysen the plaintiff company was incorporated as part of a missing trader fraud or carousel fraud scheme designed to defraud the tax authorities of value added tax VAT This scheme involved a trading entity ie the missing trader being incorporated and registered for VAT within the United Kingdom This entity would purchase goods from suppliers outside the United Kingdom but within the European Union free from VAT sell the goods on in the United Kingdom charging VAT and then pocket the VAT arising from the supply of goods without accounting to the tax authorities In Madysen the plaintiff purchased a consignment of goods from Luxembourg without VAT and then entered into a contract to sell the goods with VAT on to the defendants The defendants refused to make payment and contended that the contract was unenforceable for illegality Field J held that the fraudulent intention of the plaintiff at the time of the contract did not render the contract illegal because it was too remote from the contract there was not a sufficient proximity between the plaintiff s fraudulent intention and the contract for the contract to be vitiated by illegality see Madysen at 21 64 In our view there is in substance no real difference between the approaches taken in ParkingEye and Madysen For instance if the illegal conduct is too remote from the contract concerned then it could be argued that to find that that contract is rendered void and unenforceable because of that illegal conduct would be to administer the doctrine of illegality and public policy in a disproportionate manner However it seems to us that the principle of proportionality is broader and more malleable than that of remoteness It is capable of encompassing not only the concept of remoteness of the illegality but also considerations such as the nature of the illegality ie whether the illegality was of a serious or trivial nature and the relative effects on the parties of rendering the contract concerned unenforceable 65 Therefore whilst there may in most situations at least be no real difference between these two approaches in ParkingEye and Madysen respectively the principle of proportionality is probably preferable for its simplicity and adaptability Indeed proportionality has long formed part of the judicial approach towards the doctrine of illegality and public policy As Bingham LJ as he then was observed in the English Court of Appeal decision of Saunders v Edwards 1987 1 WLR 1116 at 1134 Where issues of illegality are raised the courts have as it seems to me to steer a middle course between two unacceptable positions On the one hand it is unacceptable that any court of law should aid or lend its authority to a party seeking to pursue or enforce an object or agreement which the law prohibits On the other hand it is unacceptable that the court should on the first indication of unlawfulness affecting any aspect of a transaction draw up its skirts and refuse all assistance to the plaintiff no matter how serious his loss nor how disproportionate his loss to the unlawfulness of his conduct 66 We would therefore agree that where a contract is entered into with the object of committing an illegal act the general approach that the courts should undertake is to examine the relevant policy considerations underlying the illegality principle so as to produce a proportionate response to the illegality in each case As alluded to above this was the approach advocated by the English Law Commission and endorsed by Toulson LJ in ParkingEye The English Law Commission in The Illegality Defence 2009 at paras 3 126 3 135 considered that the factors relevant to assessing proportionality included a whether allowing the claim would undermine the purpose of the prohibiting rule b the seriousness of the offence c the causal connection between the claim and the illegal conduct d the conduct of the parties and e the proportionality of denying the claim similar factors were previously stated in Illegal Transactions 1999 at paras 7 27 7 43 67 Factor c above relates to how closely the unlawful conduct is connected to the particular claim It is in substance similar to the principle of remoteness of the illegality which was the very pith and marrow of Prof Furmston s view as set out above at 54 and which as we have seen was also applied in Madysen Anglo Petroleum and most recently ParkingEye This principle of remoteness of the illegality means that some real or central and not merely remote connection must be demonstrated by the party relying on the defence of illegality between the contract concerned and the unlawful intention whether that unlawful intention relates to a contravention of statute or the common law We have also noted above that a key indication as to whether the illegality is too remote from the contract lies in whether any overt step in carrying out the unlawful intention was taken in the contract itself see above at 56 68 In so far as the factor e at 66 above concerning the proportionality of denying the claim is concerned we would observe from the commentary on this factor that it in fact relates to the consequences of denying the claim see The Illegality Defence 2009 at paras 3 135 Proportionality is therefore not simply one of the factors to be considered but applies as an overarching principle for the court to determine whether denial of the relief sought is a proportionate response to the illegality 69 It should be noted that the factors first proposed by the English Law Commission in Illegal Transactions 1999 were also discussed by the Law Reform Committee of the Singapore Academy of Law in its report entitled Relief from Unenforceability of Illegal Contracts and Trusts 5 July 2002 at para 8 10 and adopted in a modified but substantially similar form in the Committee s proposed draft bill entitled Illegal Transactions Relief Act 2002 which accompanied the report The relevant section of the draft bill reads as follows Relevant considerations 6 1 In granting or refusing to grant relief the court shall have regard to all relevant circumstances including a the public interest b the seriousness of the illegality c whether denying relief will act as a deterrent d whether denying relief will further the purpose of the rule which renders the transaction illegal e whether denying relief is proportionate to the illegality involved f the circumstances of the formation or performance of the illegal transaction including the intent knowledge conduct and relationship of the parties g whether any party to the illegal transaction was at a material time acting under a mistake or fact or law h the extent to which the illegal transaction has been performed i whether the written law which renders the transaction illegal has been substantially complied with j whether and to what extent the written law which renders the transaction illegal provides relief and k other consequences of denying relief 70 We would summarise the general factors which the courts should look at in assessing proportionality in the context of contracts entered into with the object of committing an illegal act as including the following a whether allowing the claim would undermine the purpose of the prohibiting rule b the nature and gravity of the illegality c the remoteness or centrality of the illegality to the contract d the object intent and conduct of the parties and e the consequences of denying the claim 71 It should be emphasised that this is not necessarily a conclusive list of factors and more importantly that these factors should not be applied in a rigid or mechanistic fashion Rather these factors should be applied to each individual case and weighed and considered by the court in the context of the particular facts of that case itself All this underscores the very fact centric nature of the inquiry that has to be undertaken by the court in this regard This is not perhaps entirely satisfactory when viewed from a strictly theoretical perspective but is in our view only to be expected in the practical context in which the application of the law to the relevant facts is involved and in which the inherently difficult concept of public policy see above at 33 35 is also involved 72 Similar sentiments were echoed by Etherton LJ in Les Laboratoires at 63 which sentiments were in turn cited in part by Sir Robin Jacob in ParkingEye at 28 as follows Counsel on both sides conducted an extensive review of many authorities on the illegality principle They all argued however in their respective ways for an analysis and statement of the law which is too dogmatic and inflexible It is not necessary in order to resolve this appeal to undertake a comprehensive analysis of the decided cases Such an exercise would in any event be complex very lengthy and in large part unrewarding The decisions inevitably turn on their own particular facts The statements of law or principle they contain are not all consistent or easily reconciled The jurisprudence in this area has been an evolving one but its evolution has not followed a consistent pattern emphasis added 73 A more general observation on this particular category of illegality at common law is apposite at this juncture As we have already noted this category is a rather broad and general one On one view it can be seen as a kind of bridging category which focuses on the substance of the transaction instead of its form To elaborate one or both of the contracting parties will not be permitted to evade the law whether in its statutory or common law form by simply structuring the transaction in a manner which renders the contract lawful on its face if the underlying purpose of the transaction would constitute a general affront to public policy 74 That having been said what then would constitute an unlawful act which would trigger the operation of such a category Put another way what would constitute a purpose that is illegal or contrary to public policy 75 One clear situation would involve contravention of a statutory provision Indeed it should be noted that Devlin J in St John Shipping rendered his statement of principle see above at 43 in the context of an alleged situation of statutory illegality Likewise in Anglo Petroleum the English Court of Appeal expressly stated that a contract might be illegal and unenforceable if it was entered into for the purpose of doing an act prohibited by statute see Anglo Petroleum at 54 However whether or not there is a sufficient linkage or connection between the contract concerned and the statutory contravention is one that depends upon the application of the principles set out above at 42 72 76 What then about an intended act or purpose that is unlawful in the context of the common law In particular would that intended act or purpose need to fall within the purview of an established head of illegality It would appear that this ought to be the case simply because whilst the heads of public policy at common law are not closed it would be a circular argument of sorts to seek to premise unlawful conduct on a head that has yet to be established at common law However if so could it then be argued that the contract concerned would fall foul of that particular head of public policy in any event so that there would be no need to invoke the present and more general category Correlatively if the court could be persuaded that a new head of public policy ought to be established then there would be no need to invoke this more general category in the first place That having been said it is unnecessary for us to arrive at a conclusive view in the present appeal since the only unlawful act at common law which is potentially involved in this case is the defrauding of a third party which clearly falls within an established head of public policy 77 To summarise there is a category of contracts illegal at common law which comprise contracts entered into with an illegal or unlawful object Such contracts because they are in themselves not unlawful can be distinguished from contracts to do acts that are illegal or contrary to public policy for example contracts to commit a crime tort or fraud Case law has demonstrated that this category may include contracts entered into with the object of using the subject matter of the contract for an illegal purpose contracts entered into with the intention of using the contractual documentation for an illegal purpose as well as contracts which are intended to be performed in an illegal manner Further the application of the doctrine of illegality to this particular category of contracts is subject to the limiting principle of proportionality This in turn necessitates a consideration of inter alia the factors outlined above at 70 including the remoteness or centrality of the illegality to the contract In the final analysis the question is whether on the facts and circumstances of each individual case the refusal to enforce the contract is a proportionate response to the unlawful conduct concerned taking into account the various policies underlying the doctrine of illegality and public policy 78 Let us now turn to apply the relevant legal principles set out above to the facts of the present appeal Our decision 79 It is necessary to first identify and define the alleged illegality If the illegality cannot be identified then there is no need to even consider the effects of illegality let alone how such effects can be mitigated see Illegality and Public Policy at para 13 005 Also the fact of an alleged illegality cannot be assumed when it has yet to be proved see for example the decision of this court in AJU v AJT 2011 4 SLR 739 80 In our view the illegality in the present case was the intended contravention of a statutory instrument in the form of the 5 October Notice On the Respondents own evidence they had intentionally requested that the Option be backdated for the purposes of obtaining a bank loan on the more favourable terms allowed prior to the 5 October Notice see above at 8 The illegality was in the Respondents intention which was not apparent on the face of the Option to use the Option itself ie its documentation to circumvent and contravene the 5 October Notice 81 It is no answer to say that the Option itself did not require the doing of anything which involved a breach of the Act or the 5 October Notice or that the Option could have been performed by the parties without such contravention of the law The Option falls under the head of illegality at common law concerning contracts entered into with the object of committing an illegal act discussed above at 42 77 As we have seen this category of contracts is recognised as void and unenforceable at common law because the courts will look not only at the form of the transaction but also its substance and therefore find that an unlawful intention behind the contract renders the contract itself unlawful 82 Proceeding to apply the principle of proportionality we are of the view that to refuse the Respondents enforcement of the Option would indeed be a proportionate response to the illegality taking into account the relevant factors identified above at 70 First of all the Respondents object and intent from the outset was to use the false date stated in the Option for a purpose which they knew was prohibited As we have already noted above the Respondents very well knew about the 5 October Notice around the time it was announced 83 Secondly the nature of the illegal act which the Respondents set out to commit was not trivial The main policy objective of the 5 October Notice was to limit the quantum of residential property loans so as to foster stability in the property market a point which will be elaborated on further at 119 in the context of statutory illegality That part of the 5 October Notice which the Respondents sought to contravene was directly related to this policy objective and was not merely trivial or administrative in nature 84 Thirdly allowing the Respondents claim would undermine the purpose of the rule which the illegal conduct has infringed that is the 5 October Notice As we have already noted that part of the 5 October Notice which the Respondents sought to contravene was directly related to its main policy objective of fostering price stability in the property market this policy objective would indeed be undermined if we were to permit the Respondents to enforce the backdated Option 85 Fourthly and most importantly the Respondents illegal purpose was not too remote from the Option In this regard a key factor to take into account is that there was indeed an overt an integral step in carrying out the Respondents unlawful intention taken in the Option itself this overt step was the stating of a false and earlier date in the Option In other words the objectionable part of the transaction resided within the Option itself and not outside it In this respect the present case bears resemblance to the case of Alexander where the splitting of the transaction into two documents was held to be an overt step in carrying out the fraudulent intention and therefore rendered the documents unenforceable see Alexander at 189 86 In so far as the remoteness of the illegality is concerned the present case is also analogous to two other cases in which the contracts concerned were held to be unenforceable The first case is the English Court of Appeal decision of Napier v National Business Agency Ltd 1951 2 All ER 264 Napier which concerned an employment agreement that provided for payment in two capacities the first being 13 per week for salary and the second being 6 per week for expenses It was known to both parties that the latter figure of 6 per week for expenses was inflated for the purposes of reducing the amount of income tax payable by the employer It was therefore held that the employee was not entitled to enforce the agreement although his claim was only in respect of his salary of 13 per week because the insertion of a fictitious figure for expenses in order to defraud the revenue was illegal and vitiated the whole agreement see Napier at 266 87 The second case is the decision of the Canadian Supreme Court in Zimmermann v Letkeman 1978 1 SCR 1097 Zimmermann In this case the transaction which was for the sale and purchase of a property consisted of two documents a an offer to purchase and an acceptance stating a price of CAN 135 000 and b a document stating the actual price of CAN 117 500 and that it rendered the signed offer to purchase null and void pertaining to purchase price Applying Alexander the trial judge held that the buyer was not entitled to enforce the agreement for sale of the property since he had intended to use the false purchase price in the first document for the purpose of getting a larger loan from the mortgage company than he would otherwise have been able to justify The Canadian Supreme Court affirmed the trial judge s decision It is evident from the outcome of the case that the court did not think that the buyer s illegal intention was too remote from the contract even though it did not expressly address the issue 88 Conversely the present situation can be distinguished from ParkingEye and Madysen where any illegality was merely external or incidental to the contracts concerned and there was no overt step in the transaction itself taken in pursuance of the fraud In ParkingEye the form of the demand letters was not stipulated in the contract which was for the installation of automated parking systems in car parks Similarly in Madysen the contract itself was a straightforward agreement for the sale of goods that was lawful in itself it merely provided the opportunity for the plaintiff company to profit from the intended fraud see Madysen at 19 In contrast in the present case the Option itself misrepresented the actual facts by stating a false date 89 It is pertinent to note that a number of other factors distinguish the present case from ParkingEye Firstly in ParkingEye one of the relevant considerations which led to a rejection of the illegality defence was that the claimant did not have a fixed intention of acting unlawfully as it had not appreciated the potential legal implications of the letters and that if someone had pointed them out the letters would have been changed see ParkingEye at 19 68 and 75 In contrast it is not in dispute in this appeal that the Respondents appreciated the legal implications of the 5 October Notice on the quantum of their impending loan from the Bank and had asked for the backdating of the Option precisely to avoid those legal implications 90 Secondly in ParkingEye it was recognised that the contract was not a one off contract but a contract involving continuous performance over time that was largely carried out lawfully and indeed could have been lawfully
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Progen Engineering Pte Ltd v Winter Engineering (S) Pte Ltd [2006] SGHC 224
of Court must be filed within 21 days of the award being made and published to the parties see Hong Huat Development Co Pte Ltd v Hiap Hong Co Pte Ltd 2000 2 SLR 609 Hong Huat at 20 Even assuming arguendo that the arbitrator was not entitled to demand the payment of his additional fees as a pre requisite to the release of the Second Award the plaintiff should not have stood by silently It could have paid the requisite fee under protest contested the issue with the arbitrator or immediately sought directions from the court It appears to me that the plaintiff was entirely apathetic and failed to diligently resolve the procedural impasse with the arbitrator 9 I am inclined to the view that even the plaintiff s categorical refusal to settle the arbitrator s fees is entirely misconceived Section 25 3 of the Arbitration Act requires an arbitrator to whom a matter is referred by a judge to have his remuneration in respect of that matter determined solely by the court This power to refer is expressly conferred by s 22 of the Arbitration Act in certain very limited instances such as the examination of documents scientific investigations and the settling of accounts On the other hand the remitted issues in the instant scenario were remitted not referred to the arbitrator for reconsideration under an altogether different scheme and judicial power pursuant to s 28 2 of the Arbitration Act An arbitrator in such a situation is not in my view constrained by s 25 3 of the Arbitration Act 10 In Hong Huat the Court of Appeal determined that an award was made and published to the parties pursuant to O 69 r 4 2 of the Rules of Court as soon as the parties were notified by the arbitrator that the award was ready for collection and not when the parties had actual sight of the contents of the award This principle if applied literally would mean that the 21 day period stipulated by O 69 r 4 of the Rules of Court expired on 19 October 2005 some three months before the plaintiff had actual sight of the Second Award This the plaintiff now asserts is neither right nor fair I am not inclined to show any sympathy to the plaintiff s plea as it could quite easily have redressed the situation by taking one or more of several measures as outlined in 8 It appears to me that the plaintiff s conduct leaves much to be desired both in substance and in spirit I can do no better than to adopt the observations of the Court of Appeal in Hong Huat 8 supra at 25 when it expanded on the pragmatic policy reasons underpinning the notice rule In our opinion the notice rule is to be preferred as it ensures prompt action and does not depend on the will of the parties To hold otherwise would be inconsistent with the legislative policy underlying the reference to arbitration namely the expeditious resolution of arbitrated disputes and the need for finality In a case where extenuating circumstances exist the parties are at liberty to apply for an extension of time Obviously whether extension should be granted in a particular case would have to depend on how meritorious the grounds are emphasis added 11 In Hong Huat the Court of Appeal further held that the same discretionary considerations ought to be applied in assessing the merits of granting leave whether it is in respect of an application appealing against an award made outside the stipulated period or in respect of the filing of a notice of appeal out of time These considerations have been aptly summarised in the following passage in Pearson v Chan Chien Wen Edwin 1991 SLR 212 at 2 2 The extension of time was a question of discretion The factors the court would consider were a the length of the delay b the reasons for the delay c the chances of the appeal succeeding if time for appealing was extended and d the degree of prejudice to the would be respondent if the application was granted It was particularly important to consider the chances of the appeal succeeding as it would be a waste of time for all concerned if time was extended when the appeal was utterly hopeless emphasis added More recently in Lai Swee Lin Linda v Attorney General 2006 2 SLR 565 the Court of Appeal noted at 45 When applying these factors the overriding consideration is that the Rules of Court must prima facie be obeyed with reasonable diligence being exercised see the Privy Council decision of Thamboo Ratnam v Thamboo Cumarasamy and Cumarasamy Ariamany d o Kumarasa 1965 1 WLR 8 Ratnam v Cumarasamy at 12 and the Singapore High Court decision of Tan Chai Heng v Yeo Seng Choon 1980 1981 SLR 381 at 382 5 This court has also pointed out in The Melati 2004 4 SLR 7 at 37 that the paramount consideration is the need for finality It should be borne in mind in this regard that the would be appellant has already had a trial and lost see Ratnam v Cumarasamy supra at 12 Hence if no appeal is filed and served within the prescribed period here of one month the successful party is justly entitled to assume that the judgment concerned is final see Ong Cheng Aik v Dayco Products Singapore Pte Ltd supra at 8 emphasis added in bold italics 12 In its written submissions to the court the plaintiff gave only the following bare reason for the delay in seeking leave The circumstances surrounding the publication of the Second Award was not caused by the Applicant as it is clear under s 23 3 of the Arbitration Act Cap 10 1985 Revised Edition that the Judge had the power to determine the remuneration of the Arbitrator where issues were remitted to the Arbitrator and the Arbitrator was wrong to
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PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA [2007] 1 SLR 597; [2006] SGCA 41
jurisdictional issues before the Second Tribunal following which a preliminary meeting was held on 12 November 2002 in which the Second Tribunal gave the following directions That the following issues be heard as preliminary jurisdictional issues a Whether the tribunal has jurisdiction to entertain the present proceedings in light of the history of the earlier proceedings between the Parties and b Whether the divestment of MCP s shares in CAP prevent the appellant from proceedings sic in these proceedings Consequential Orders c that the respondent be given 1 month from today to file and serve written submissions in respect of the Preliminary Objections The appellant be given 1 month from the date of the service of the respondent s written submissions on it to file and serve its Reply d that the Oral Submission be fixed for half a day to be conducted by video conferencing on the 11 th of February 2003 at 10 00 am 17 The scheduled oral hearing did not take place as both parties failed to file their submissions before the stipulated time Instead on 30 July 2003 the respondent sent the Second Tribunal written submissions raising a third preliminary jurisdictional issue ie that the respondent had disposed of its BI Notes thus potentially rendering the proceedings moot The Second Tribunal directed the appellant to respond to this issue and for the parties to file their submissions on the preliminary objections by 17 November 2003 The respondent and the appellant filed their submissions on 23 October 2003 and 17 November 2003 respectively The Second Award 18 The Second Tribunal without holding an oral hearing issued the Second Award on 5 December 2003 containing the following findings a that the appellant was entitled to proceed with the arbitration even though the respondent had disposed of the BI Notes and the appellant had divested the MCP shares in CAP and b that on the basis of the rule in Henderson v Henderson 1843 3 Hare 100 the action in this proceeding is a misuse of the process of the Court in that the appellant could and should have brought the present claims in the First Arbitration and therefore the appellant was estopped from raising the issue of the June 2001 meeting which they should have properly done at the First Arbitration 19 Significantly under para 8 1 of the Second Award the Second Tribunal concluded that As the appellant has failed on the third issue it is the decision of this Tribunal that the respondent succeeds on the preliminary question of jurisdiction and the appellant s action is hereby dismissed emphasis added It seems clear from these words that the Second Tribunal held that it had no jurisdiction to determine the substantive issues in the submission to arbitration Indeed this is confirmed by para 7 10 of the Second Award which reads as follows We have not considered the substantive issues of a whether there was a June 2001 meeting b whether there was a breach on the part of the respondent in not complying with the terms of the June 2001 meeting c whether the appellant was ready and willing to carry out the terms under the June 2001 meeting and d whether there was an acceptance of the default of the respondent by the appellant and or termination of the agreement between the appellant and the respondent by the appellant 20 The relevant findings of the Second Tribunal on estoppel are set out in paras 7 23 7 27 and 7 28 of the Second Award as follows 7 23 the appellant chose not to participate in the First Arbitration The First Tribunal specifically found that the meeting of 29 February 2000 was improperly convened The appellant says that the June 2001 meeting was to ratify the resolutions passed at the 29 th February 2000 meeting Thus the June 2001 meeting would have been directly relevant for the First Tribunal to consider The Statement of Case in its present form should have been submitted by the appellant to the First Tribunal This the appellant clearly did not do This smacks of a collateral attack on the First Award 7 27 We do not agree with the appellant that it had attempted to raise the issue of the June 2001 meeting before the First Arbitration In fact it is clearly stated to the contrary in the First Award in that the appellant did not participate in the First Arbitration for reasons best known to them 7 28 On the basis of the law as stated above we find that the appellant is estopped from raising the issue of the June 2001 meeting now which the appellant should have properly done in the First Arbitration This is an issue which might have been and should have been brought forward as part of the First Arbitration but was not brought forward by the appellant emphasis added Application to the High Court to set aside the Second Award 21 The appellant applied to the High Court for the following orders a that the Second Award ordering that the Second Arbitration be dismissed on the basis that the Second Tribunal had no jurisdiction to entertain the proceedings be set aside b that the preliminary issues objections raised by the respondent in the Second Arbitration be dismissed and c that the arbitration be remitted back to the Second Tribunal for hearing The grounds of the application were as follows a that the Second Award is in conflict with the public policy of Singapore and thus in breach of Art 34 2 b ii of the Model Law b that the Second Award deals with disputes or issues not contemplated by or alternatively not falling within the terms of the submission to arbitration and or contains decisions on matters or issues beyond the scope of the submission to arbitration thus leading to a breach of Art 34 2 a iii of the Model Law c that a breach of natural justice under s 24 b of the Act has occurred in connection with the making of the Second Award by which the rights of the appellant have been prejudiced and d that the appellant had not been given a full opportunity to present its case and or was otherwise unable to present its case and thus there was a breach of Arts 34 2 a ii and 18 of the Model Law 22 The trial judge after hearing counsel rejected all the grounds and dismissed the application With respect to ground c she held that there was no breach of natural justice or any failure to give the appellant an opportunity of being heard and with respect to ground d she held that parties to arbitral proceedings had no right to an oral hearing We agree with the trial judge s decision on these two grounds and for the same reasons reject the appeal based on these grounds The three critical findings 23 With respect to grounds a and b counsel for the appellant focused his attack on three critical findings the three critical findings in the Second Award that formed the basis of the issue estoppel that led the Second Tribunal to decide that it had no jurisdiction to determine the substantive issues as set out in para 7 10 of the Second Award see 19 above The three critical findings as reformulated by us are as follows a the finding in paras 7 23 and 7 27 that the appellant did not raise the June 2001 meeting at the First Arbitration because it chose not to participate in the First Arbitration first critical finding b the finding in para 7 23 that had the June 2001 meeting been raised it would have been directly relevant for the First Tribunal to consider the second critical finding and c the finding in para 7 28 that the appellant was estopped from raising the issue of the June 2001 meeting which it might and should have been brought forward as part of the First Arbitration but was not brought forward by the appellant the third critical finding Counsel contended that each of the three critical findings contradicted the findings of the First Tribunal and had thereby contravened the finality principle enacted in s 19B of the Act Consequently the critical findings were illegal and contrary to the public policy of Singapore Further and in the alternative the critical findings were also for the same reason beyond the scope of the submission to arbitration under Art 34 2 a iii of the Model Law Accordingly for those reasons the appellant argued that the said findings and consequently the Second Award should be set aside The trial judge s findings The first critical finding 24 With respect to the first critical finding counsel for the appellant contended that it conflicted with a finding of the First Tribunal in that the First Tribunal had considered the appellant s defence of sovereign immunity as set out in a lengthy letter sent to it and had also acknowledged that it had received the Minutes It was also suggested that the First Tribunal had distinguished the positions taken by the appellant and the Issuer in the First Arbitration in para 2 3 and 2 4 of the First Award see 14 above It was submitted that these evidenced some form of participation on the part of the appellant The trial judge accepted this argument and found that the Second Tribunal erred in finding that the appellant did not participate in the First Arbitration She held that a party could participate in arbitral proceedings without being present or represented at the hearing At 38 of her judgment PT Asuransi Jasa Indonesia Persero v Dexia Bank SA 2006 1 SLR 197 her Judgment she explained If the party communicates with the tribunal on any matter relating to the proceedings including the issue of whether the tribunal has jurisdiction to hear the arbitration such communications would be regarded as participation albeit limited participation in the proceedings In this case the First Tribunal in para 2 4 of the First Award made clear that the appellant had participated to a limited extent in the First Arbitration 25 The trial judge decided that the Second Tribunal was not entitled to make a finding that was inconsistent with the finding of the First Tribunal as it was final and binding between the parties and accordingly that the finding that the appellant did not participate in the First Arbitration ie the first critical finding was liable to be set aside However based on Art 34 2 a iii of the Model Law she also held that this did not affect the finding on estoppel ie the third critical finding which was not dependent on the finding on non participation 26 We agree with the trial judge that on the basis of her analysis the first critical finding is irreconcilable with paras 2 3 and 2 4 of the First Award However we can see no purpose in setting aside the first critical finding unless it is also a ground for setting aside the First Award under the Act or the Model Law As such though we are in agreement with the trial judge s finding at 38 of her Judgment it is unnecessary for us to comment further since the first critical finding has no effect on the validity of the third critical finding and therefore no effect on the validity of the First Award The second critical finding 27 The argument of counsel for the appellant on the second critical finding was that the finding that the June 2001 meeting would have been directly relevant for the First Tribunal to consider was inconsistent with the finding of the First Tribunal that the June 2001 meeting was irrelevant to the issues requiring determination by the First Tribunal The trial judge rejected this argument stating in 40 and 41 of her Judgment as follows 40 Although the appellant sent the First Tribunal the Minutes the appellant did not formally raise the resolutions passed at the June 2001 meeting as an answer to the respondent s contention that the resolutions passed at the February 2000 meeting did not bind it Accordingly the issue of the effect of the June 2001 meeting on the earlier meeting was not before the First Tribunal for determination and that was all that the First Tribunal was saying when it found that the documentation was irrelevant to the issues requiring determination by it The First Tribunal was not stating that the issue had been raised nor was it stating that the issue could not have been raised 41 The Second Tribunal did not say that the June 2001 meeting was relevant to the issues before the First Tribunal as the same had been formulated by the parties What the Second Tribunal said was that the June 2001 meeting would have been directly relevant ie it would have been relevant for the First Tribunal s consideration had it been raised by the appellant as an issue The Second Tribunal was also saying that by simply sending the Minutes of the meeting to the First Tribunal without any accompanying submission or representation the appellant had not put the June 2001 meeting in issue In my judgment therefore the second critical finding of the Second Tribunal did not contradict the finding of the First Tribunal emphasis added 28 In our view the second critical finding subsumes two separate findings on two different questions one of fact and the other of law The first is the finding of fact that the appellants did not raise the June 2001 meeting before the First Tribunal Such a finding is implicit in the omnibus finding that the June 2001 meeting would have been relevant if it had been raised The second is the finding of law that the June 2001 meeting would have been relevant for the First Tribunal to consider had it been raised As is apparent from the extract above the trial judge agreed with the Second Tribunal that the June 2001 meeting was not formally raised at the First Tribunal On the finding of law however the trial judge declined to decide whether as a matter of law the June 2001 meeting was relevant to the issues formulated by the parties in the First Arbitration ie whether the First Tribunal had jurisdiction or power to consider the legal effect of the June 2001 meeting Instead the trial judge avoided the issue by finding that the First Tribunal had not said that the issue had been raised or that it could not have been raised As such since the Second Tribunal merely found that the June 2001 meeting would have been relevant for the First Tribunal s consideration had it been raised by the appellant as an issue emphasis added there was no inconsistency between what the Second Tribunal had found and what the First Tribunal had said 29 In our view the trial judge s ruling on the question of law implied in the second critical finding gives primacy to form and does not address the substance of the argument The logic of the finding seems to be that if A did not say X then it is not inconsistent for B to say X We should highlight again that what the First Tribunal actually said was that the June 2001 meeting was irrelevant for its determination and what the Second Tribunal said was that if the June 2001 meeting had been raised it would have been relevant for the determination of the First Tribunal On the face of these two statements it is evident that they are inconsistent on the issue of relevance The trial judge herself was not unaware of the problem Indeed at 41 of her Judgment she stated The Second Tribunal did not say that the June 2001 meeting was relevant to the issues before the First Tribunal as the same had been formulated by the parties In our view the Second Tribunal could not say that because it would have implied that the June 2001 meeting was relevant to the issues as formulated by the parties for the determination of the First Tribunal On this basis it is difficult to understand how the Second Tribunal was able to conclude that if the June 2001 meeting had been raised it would have been relevant for the First Tribunal to consider when it was not relevant to the issues formulated by the parties for the First Tribunal to decide 30 Indeed the trial judge was aware that the First Tribunal might have had no jurisdiction to consider the June 2001 meeting as she raised this question at 41 of her Judgment though she declined to answer it There she observed Whilst it may be argued though I express no concluded opinion on this that the Second Tribunal was wrong to find that the June 2001 meeting would have been relevant to the considerations of the First Tribunal had it been raised because this was arguably an issue which was not within the jurisdiction of the First Tribunal to determine such a wrong finding on the part of the Second Tribunal would not be a ground for setting aside the Second Award This is not an appeal and pursuant to the provisions of the Act errors of law or fact made by the Second Tribunal do not entitle the court to set aside the Award emphasis added 31 In our view this Court would have been greatly assisted if the trial judge had expressed a concluded opinion on the question as this issue is really the crux of the appellant s case ie that since the June 2001 meeting was not relevant to the issues formulated by the parties in the First Arbitration it was not within the scope of the submission to arbitration and would have been irrelevant even if it had been raised We can only surmise from the above passage that the trial judge probably found it unnecessary to express her opinion because in her view even if the Second Tribunal s finding were wrong in law it would not have constituted a ground for setting aside the Second Award under the Act or the Model Law As it is necessary for us to consider this issue here we will have to do so without the benefit of the views of the trial judge 32 We are of the opinion that the only circumstance in which it may be said that there is no inconsistency between the finding of the First Tribunal and that of the Second Tribunal on the relevance of the June 2001 meeting would be if the First Tribunal had expressly stated that the reason it found the June 2001 meeting irrelevant was because it was not raised before it as a defence However it is clear that the First Tribunal made no such statement nor could such a statement be implied or logically deduced from the First Tribunal s finding In our view the Second Tribunal s finding of the reason for the First Tribunal s finding of irrelevancy is entirely speculative and as will be shown later is on a balance of probabilities wrong as well 33 With respect to whether the fact of the June 2001 meeting had been raised we agree with the trial judge that the June 2001 meeting had not been formally raised before the First Tribunal This is supported by para 10 4 of the First Award where it was noted that the First Tribunal considered all possible defences raised by the Issuer and the appellant emphasis added As the First Award only considered the sovereign immunity and note exchange ie the Restructuring Scheme defences the necessary implication of such a statement is that the June 2001 meeting was at the very least not formally raised as a defence 34 Nonetheless it is clear to us that a strong argument could be made out that it was raised albeit informally The appellant had in an idiosyncratic way informed the First Tribunal of the June 2001 meeting by sending it the Minutes We do not believe that the First Tribunal was not alive to the legal implications of the June 2001 meeting if it were a valid meeting indeed as the trial judge rightly highlighted at 40 of the Judgment the Previous Tribunal must have been aware of the contents of the Minutes Given that the trial judge had decided that a party could participate in an arbitration by raising an issue informally it was rather surprising that she did not consider this aspect of the case in relation to the June 2001 meeting 35 In this connection we should point out that the First Tribunal dealt fully with the appellant s defence based on sovereign immunity although it was raised informally and furthermore as is evident from para 3 2 of the First Award see 14 above it also dealt with the possible defence of the Restructuring Scheme in spite of the fact that neither the Issuer nor the appellant raised it formally or informally This is especially significant given that neither the Issuer nor the appellant contested the invalidity of the February 2000 meeting either formally or informally Given the First Tribunal s approach on these two issues it may be pertinent to inquire why it decided to consider them at all In our opinion a reasonable explanation would be that the First Tribunal considered them to be relevant to the issues requiring determination by them while at the same time being of the view that the June 2001 meeting was irrelevant to the issues formulated by the parties for determination by them Scope of submission to arbitration 36 In our view the First Tribunal found the June 2001 meeting irrelevant not because it was not formally raised but because it was outside the scope of the submission to arbitration to the First Tribunal As noted earlier see 29 above the trial judge adverted to this in 41 of her Judgment where she said that the Second Tribunal did not say that the June 2001 meeting was relevant to the issues before the First Tribunal as the same had been formulated by the parties emphasis added Simply put then the June 2001 meeting was not an issue within the jurisdiction of the First Tribunal 37 The law on the jurisdiction of an arbitral tribunal is well established Article 34 2 a iii of the Model Law merely reflects the basic principle that an arbitral tribunal has no jurisdiction to decide any issue not referred to it for determination by the parties In relation to this matter we note Lord Halsbury s observations in London and North Western and Great Western Joint Railway Companies v J H Billington Limited 1899 AC 79 where he noted at 81 as follows I do not think any lawyer could reasonably contend that when parties are referring differences to arbitration under whatever authority that reference is made you could for the first time introduce a new difference after the order of arbitration was made Therefore upon that question I certainly do give a very strong opinion emphasis added 38 The principle finds support in the decision of Rederij Lalemant v Transportes Generales Navigacion SA The Maria Lemos 1986 1 Lloyds Rep 45 In that case the Maria Lemos was chartered by the plaintiffs to load cargo in Maputo and to discharge it in Turkey The vessel arrived at the loading port on 25 November 1984 and sailed for Turkey on 20 December 1984 A dispute arose as to whether the vessel was already on demurrage and how much demurrage if any would have been payable up to the date she sailed The defendants appointed their arbitrator on 20 December 1984 and the plaintiffs appointed theirs on 4 January 1985 The vessel arrived at the discharging port on 14 January 1985 and was there until 1 March 1985 The issue then arose as to whether the arbitration tribunal had jurisdiction to hear the dispute about discharging port demurrage a matter that had not been in issue on 4 January 1985 39 The court held that the jurisdiction that any arbitral tribunal could exercise was that bestowed by the parties and that the scope would depend on the terms in which the parties had defined it To this end the court examined the correspondence between the parties to ascertain their intention when appointing the arbitrator The court found at 47 as follows The question therefore as it seems to me is this whether the appointment on Jan 3 and 4 gave the arbitrators jurisdiction to determine not only what has been generally agreed called loading port demurrage but also prospectively to determine the quantum of discharging port demurrage in so far as discharging port demurrage would flow from a finding by the arbitrators that the charterers were in breach before the vessel left the loading port It seems to me that on any proper construction of the telex messages which stated that the arbitration extended to all disputes under the charter to which I have referred it must follow that the parties were giving the arbitrators jurisdiction to that extent The correspondence showed that they had intended the arbitration to extend to all disputes under the charter 40 Reverting to the facts of this case the scope of submission to arbitration for the First Arbitration is summarised in 5 above The submission covered only three issues viz a whether any obligation arose under the BI Notes to make payment to the respondents b whether the obligations under the BI Notes were restructured pursuant to the February 2000 meeting and c whether the appellant could avail itself of the defence of sovereign immunity The June 2001 meeting was in the language of Lord Halsbury a new difference arising after the First Tribunal had been constituted and therefore not an issue that was within the original submission to arbitration Such a new difference would be outside the scope of the submission to arbitration and accordingly would have been irrelevant to the issues requiring determination in the First Arbitration We accordingly find that the First Tribunal found that the Minutes were irrelevant not because of any failure on the part of the appellants to formally raise the matter of the June 2001 meeting but because the June 2001 meeting was an issue that was not formulated by the parties for determination by the First Tribunal It would therefore follow that the second critical finding was an erroneous finding The third critical finding 41 Moving on to the third critical finding the appellant s contention on this finding is that if the second critical finding is wrong then there could be no issue estoppel against the appellant raising the issue of the June 2001 meeting for determination by the Second Tribunal In our view this argument must be right If the June 2001 meeting is indeed irrelevant as a matter of law to the issues requiring determination by the First Tribunal then it must surely follow that the omission to raise it would itself have been irrelevant and therefore no estoppel could operate Accordingly we also find that the third critical finding was erroneous May the second and third critical findings be set aside under the Act 42 The next question we have to consider is whether the second and third critical findings may be set aside under the Act The answer depends on whether they are affected by s 19B 1 of the Act and Art 34 2 a iii of the Model Law We will consider the latter first Article 34 2 a iii of the Model Law 43 Article 34 1 of the Model Law provides that recourse to a court against an arbitral award may be made only by an application for setting aside in accordance with sub paras 2 and 3 of Art 34 Article 34 2 a iii of the Model Law goes on to provide that 2 An arbitral award may be set aside by the court specified in Article 6 only if a the party making the application furnishes proof that iii the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration or contains decisions on matters beyond the scope of the submission to arbitration provided that if the decisions on matters submitted to arbitration can be separated from those not so submitted only that part of the award which contains decisions on matters not submitted to arbitration may be set aside 44 Counsel for the appellant argued that the second and third critical findings being inconsistent with the findings of the First Tribunal could and should be set aside for not being within the scope of submission to arbitration of the Second Tribunal This argument requires this court to enter into two separate but related enquiries first the ascertainment of the matters that were within the scope of submission to the Second Tribunal and second whether the second and third critical findings involved such matters The matters within the scope of arbitration were as set out in 15 earlier as follows a whether the June 2001 meeting was valid and binding on all BI Noteholders including the respondent and b whether the Restructuring Scheme was valid and binding on all BI Noteholders including the respondent as a consequence of the June 2001 meeting 45 It is clear from the Second Award that the Second Tribunal dismissed the appellant s claim on the basis of issue estoppel As we have noted earlier this finding is erroneous However it does not necessarily follow that such an erroneous finding of law can be set aside Under Art 16 1 of the Model Law an arbitral tribunal has the power to rule on its own jurisdiction and by implication to rule on the underlying issues of fact or law that are relevant to determining whether it has jurisdiction However by its own terms Art 16 3 of the Model Law provides for an appeal to the court if the arbitral tribunal rules that it has jurisdiction but not when it rules that it does not have jurisdiction Accordingly in the context of this case we have to determine whether the Second Tribunal s negative finding on jurisdiction is a finding that may be set aside under Art 34 2 a iii of the Model Law 46 The appellant s argument is essentially that the second and third critical findings are inconsistent with the findings of the First Tribunal and as a subsequent tribunal the Second Tribunal is not entitled to make findings on the same issues inconsistent with those made by the previous tribunal ie the First Tribunal as they are not within the scope of submission It may be recalled that the trial judge set aside the first critical finding on the ground that it was inconsistent with the First Tribunal s finding on the same issue Similarly in relation to the second critical finding it is argued that it should be set aside on the same basis At 35 of her Judgment the trial judge had addressed this argument as follows T he Second Tribunal had the power to determine its own jurisdiction under the SIAC Rules which in this respect reflect Art 16 1 of the Model Law The question before me is whether in determining that jurisdiction the Second Tribunal had the power to decide issues that had already been decided by the First Tribunal In my judgment it did not If in the course of determining its jurisdiction the Second Tribunal encountered an issue that had already been decided by the First Tribunal it had no authority to determine that issue afresh but because the parties themselves were bound by the decision of the First Tribunal on that issue the Second Tribunal had also to consider itself bound by that decision and proceed on such basis The question that next arises is whether in determining that it had no jurisdiction the Second Tribunal in fact re decided any issue that had already been decided by the First Tribunal For the reasons given by the trial judge we are aware of the force of the argument that the Second Tribunal did not have the jurisdiction to make findings inconsistent with those made by the First Tribunal However since under Art 16 1 of the Model Law a tribunal has the power to determine issues that go to its own jurisdiction there is an equally strong argument that any negative finding on jurisdiction may not be set aside under Art 34 2 a iii of the Model Law even if it is wrong in law as mandated by the principle of finality applicable to arbitral findings 47 In any event as we shall see even if the second critical finding were set aside it would not follow that the Second Award must be set aside or that it is automatically rendered void There are two other obstacles in the way The first is the third critical finding a finding of law which we will consider next and the second is the question of jurisdiction an issue considered later at 61 to 74 of this judgment 48 The argument is that if the second critical finding is set aside then the third critical finding must fall with it the latter being no more than a derivative legal conclusion of the former It was after all the third critical finding that led the Second Tribunal to find that it had no jurisdiction to decide the substantive issues referred to it for determination In our view the third critical finding cannot be said to be formally inconsistent with any findings of the First Tribunal The First Tribunal s finding is that it had no jurisdiction to consider the June 2001 meeting because it was not within the issues formulated by the parties The Second Tribunal s finding is that it is estopped from considering the June 2001 meeting Strictly speaking there is no formal inconsistency between these two findings 49 That said it may be objected that such a distinction gives primacy to form over substance as the true import of the third critical finding must be that it was within the jurisdiction of the First Tribunal to decide on the issue of the June 2001 meeting This would make it squarely inconsistent with the finding of the First Tribunal as highlighted earlier that the issue of the June 2001 meeting was not within its jurisdiction to determine 50 Nonetheless in our view the third critical finding stems from an issue which a tribunal in determining its own jurisdiction is entitled to determine For that reason the third critical finding that led the Second Tribunal to find that it had no jurisdiction to decide the substantive issues referred to it for determination cannot be set aside under Art 34 2 a iii of the Model Law 51 There is one final argument in relation to Art 34 2 a iii of the Model Law which has not been canvassed before us by either counsel It is that the power of the court to set aside any findings on the ancillary or underlying matters on the grounds set out in Art 34 2 a iii of the Model Law is predicated upon the existence of an award In the absence of any such award Art 34 2 a iii of the Model Law is not engaged and the right to set aside such an award does not arise In the present context this raises the attendant question of whether the Second Award is an award for the purposes of Art 34 2 a iii of the Model Law This issue is considered at 61 to 74 of this
Original URL path: http://www.singaporelaw.sg/sglaw/laws-of-singapore/case-law/cases-in-articles/arbitration/1446-pt-asuransi-jasa-indonesia-persero-v-dexia-bank-sa-2007-1-slr-597-2006-sgca-41 (2016-01-30)
Government of the Republic of the Philippines v Philippine International Air Terminals Co, Inc[2007] 1 SLR 278; [2006] SGHC 206
the Tribunal dated 3 October 2004 and 21 October 2004 respectively objecting to the decision being issued in the form of a partial award The objection was made on the basis that an award would in contrast to an order resolve disputed issues finally and definitely and in this case the Tribunal could not decide with finality the issue of the lex arbitri until it had considered and decided certain related jurisdictional issues which would be adjudicated with the merits The letters also reiterated the jurisdictional objections that GOP had raised in January 2004 The Tribunal did not reply to these letters The award 14 The parties received the Award on 27 October 2004 The Tribunal decided a that Singapore law was the law governing the arbitration proceedings and b that Singapore law was the law governing the arbitration agreement 15 In the course of coming to its decision on the first point the Tribunal observed that it was unlikely that Singapore was chosen as the place of arbitration for non construction disputes for reasons of convenience It observed that PIATCO had substantial foreign equity but then went on to state that whether or not there was foreign equity in PIATCO at the time when it entered into the ARCA it appeared to the Tribunal that Singapore was designated as the place of arbitration in order to obtain a neutral venue for the resolution of disputes in view of the fact that PIATCO was contracting with the government of the Philippines with respect to a project in the Philippines Singapore was not a more convenient venue than the Philippines It followed in the Tribunal s view that the parties would have contemplated that the procedure of the arbitration would be governed by the law of Singapore rather than the law of the Philippines because to provide for arbitration in Singapore but in accordance with Philippine procedural law would not have resulted in the selection of a neutral venue 16 In relation to its decision on the second point the Tribunal spent much time discussing the principle of severability of an arbitration clause from the contract in which it is contained It found that the principle of severability applied in this case Then it discussed the rules for determining the law applicable to an arbitration agreement and adopted the approach taken in Michael Mustill Stewart C Boyd The Law and Practice of International Commercial Arbitration in England Butterworths 3rd Ed 1998 It noted that the parties had not specifically chosen a law to govern the arbitration agreement and considered whether there had been an implied choice of law The Tribunal observed that s 10 2 of the ARCA contained two separate and severable arbitration obligations The first related to disputes concerning the construction of the terminal or prosecution of the works and these were to be settled by arbitration in the Philippines The second related to all other disputes which were to be referred to ICC arbitration in Singapore In the opinion of the Tribunal each of these arbitration obligations was separate and distinct and not necessarily governed by the same law The Tribunal considered it significant that the parties had in the section drawn a clear distinction between arbitration of construction disputes and all other disputes The former were subjected to domestic arbitration in the Philippines while the latter were to be referred to international arbitration under the ICC Rules in a neutral venue Singapore The Tribunal then concluded at paras 84 and 85 of the Award In the opinion of the arbitral tribunal a strong implication arises that the parties not only removed non construction and Works disputes from the jurisdiction of the Philippines but also intended that the obligation to arbitrate these disputes should not be referred to the law of the Philippines In other words by designating Singapore and the ICC Rules in contrast to the other arbitration obligation appertaining to construction and Works disputes the parties implied a choice of Singapore law to govern the arbitration agreement as well as the arbitral proceedings for non construction and Works disputes One further point can be made Mustill and Boyd state that if the choice lies between two systems of law one of which would uphold the arbitration agreement and the other would not the former may be preferred A question may arise in this case as to whether the arbitration agreement is valid under the law of the Philippines in view of the decision of the Supreme Court of the Philippines holding that the ARCA is void ab initio This factor also inclines towards construing the agreement to arbitrate disputes in Singapore as governed by the law of Singapore The challenge 17 The grounds for setting aside an international arbitration award in Singapore are found in s 24 of the Act and in Art 34 of the UNCITRAL Model Law on International Commercial Arbitration the Model Law set out in the First Schedule to the Act In the present case GOP seeks to rely on various parts of each of these provisions 18 The grounds of the application are a that the rules of natural justice have been breached in connection with the making of the Award and GOP s rights have been prejudiced thereby contrary to s 24 b of the Act b GOP was unable to present its case contrary to Art 34 2 a ii of the Model Law c the Award deals with a dispute not contemplated by and or not falling within the terms of the submission to arbitration and or contains decisions on matters beyond the scope of the submission to arbitration contrary to Art 34 2 a iii of the Model Law and d the arbitration agreement is not valid under the law of the Republic of the Philippines or under the law of Singapore contrary to Art 34 2 a i of the Model Law I note here that as counsel for GOP submitted the ground for setting aside an award on the basis that the party applying was unable to present its case is the same as the ground arising from a breach of the rule of natural justice that parties must be given a fair opportunity to be heard which rule is usually referred to by its Latin tag audi alteram partem In view of that in this case the first two grounds are really one ground As for the last ground GOP did not proceed with it in its submissions 19 The two key findings of the Tribunal that GOP complained about were the finding that the principle of severability applied in this case and secondly the finding that Singapore was chosen as a neutral place for the arbitration Severability GOP s case 20 As far as the principle of severability is concerned it is GOP s case that the decision on this issue was a breach of the audi alteram partem rule and also was beyond the scope of the submission to arbitration The following summary of its arguments shows that GOP s attack here was based on grounds a b and c as set out in 18 above 21 GOP asserted that pursuant to the directions agreed upon at the preliminary conference and the order of the Tribunal of 28 June 2004 parties were to provide submissions by 20 August 2004 on only emphasis GOP s the issues relating to the law governing the arbitration proceedings and the law governing the arbitration agreement As a consequence GOP limited its submissions to these two issues and was shocked when the Award contained a finding that the principle of severability applied GOP argued that it was necessary for the Tribunal to first make a ruling on the choice of law before the parties could address the jurisdictional arguments including whether the arbitration agreement was severable from the main contract In GOP s view the issue of severability was one of its four jurisdictional arguments ie the argument that the Agan decision which held that the Concession Contracts were null and void ab initio meant that the arbitration agreement in the ARCA was similarly null and void ab initio It also contended that it could not reasonably have considered that this issue would be decided prior to the jurisdictional phase of the arbitration because it had filed a motion for bifurcation of the proceedings and this had been accepted by PIATCO and the Tribunal before parties submissions on the applicable laws were handed in on 20 August 2004 The order issued by the Tribunal further included a procedural time table for the jurisdiction liability phase GOP submitted that therefore the Tribunal had misconducted itself in making an explicit decision on severability in the Award and thereby implicitly making a decision as to the arbitration agreement It considered that the Tribunal had effectively determined a jurisdictional issue when the jurisdictional obligations had not even been submitted on It was never agreed said GOP that the Tribunal would decide the issue of severability at this stage of the proceedings 22 GOP asserted that a significant portion of PIATCO s submissions had been devoted to arguments related to the various jurisdictional arguments put forward by GOP such as a the severability of the arbitration agreement from the ARCA b the legal capacity of the government entities who signed the ARCA on behalf of GOP and c fraud and corruption relating to the ARCA and its arbitration agreement These fundamental matters it said were outside the scope of the issues referred to the Tribunal for a finding to be made at that time Whilst PIATCO took the view that it had put in issue the principle of severability by submitting on the point in its submissions this did not mean that the Tribunal was entitled to render a decision on that issue in the Award In fact that assertion was absurd Taken to its logical conclusion PIATCO s position meant that the Tribunal would be entitled to decide on any point raised in the terms of the reference as and when it felt like it and whether or not the parties had made submissions on it Further the Tribunal would have been entitled to render a decision on any of the other issues PIATCO had raised in its submissions irrespective of whether GOP was put on notice that the Tribunal was going to consider that point This would also render any agreement between the parties on the issues to be referred to an arbitral tribunal nugatory 23 GOP further argued that it was deprived of any opportunity to present its case on the issue of severability The Tribunal had not given any indication prior to the issue of the Award that it would be making a decision on the issue of severability If the Tribunal had felt it necessary to render a decision on this point it should have given the parties prior notice of this and then given them an opportunity to make full submissions on this issue As a consequence of the Tribunal s misconduct GOP had made no submissions on the point 24 In GOP s view it had been seriously prejudiced by the Tribunal s premature determination that the principle of severability applied in the case because that meant that GOP had been effectively deprived of one of its jurisdictional objections The issue of severability was critical to GOP s objections to the Tribunal s jurisdiction because of the effect of the Agan decision Further the Tribunal made its finding on the issue of severability in blatant disregard of GOP s statement that nothing in its submissions constituted a waiver of its defences jurisdictional objections and counterclaims The Tribunal had also misconstrued GOP s submissions by commenting that whilst GOP had initially contended that the principle of severability did not apply in the Philippines it had not maintained this position in its submissions of 25 August 2004 and had instead conceded in those submissions that the law governing an arbitration agreement could differ from the law governing the substantive contract Discussion 25 From the foregoing summary of GOP s case it can be seen that its complaint that the issue of severability was beyond the scope of the submission to arbitration is a mirror image of the complaint that it was not given a fair opportunity to make submissions on this point and was thus denied natural justice If the issue of severability was within the scope of the submission of arbitration and GOP should have known that fact without it having to be pointed out expressly then GOP having been given the same opportunity to make submissions to the Tribunal as PIATCO was given had the same opportunity that PIATCO had and PIATCO took to make submissions on severability 26 In this connection the issue before the Tribunal was which system of law governed the arbitration agreement PIATCO s submission was that the issue of severability was a necessary part of the reasoning process that led the Tribunal to its conclusion that Singapore law was the proper law of the arbitration clause GOP on the other hand considered that the Tribunal could have decided on the applicable law by applying principles relating to choice of the proper law and not going into the issue of severability at all 27 What is the principle of severability or separability as it is sometimes called As the Tribunal puts it in para 49 of the Award The principle is that the arbitration agreement is separate from the substantive contract and therefore can survive the termination of the substantive contract Thus an allegation that the substantive contract has been terminated or is void does not ipso facto spell the end of the arbitration agreement and deprive an arbitral tribunal of jurisdiction 28 The situation that existed in this case was that there had been several petitions in the Philippine Supreme Court challenging the validity of the ARCA and that the Philippine Supreme Court had come to a decision that the ARCA was null and void One of GOP s grounds for challenging the jurisdiction of the Tribunal was that the ARCA being void nothing remained and no arbitral tribunal could be constituted to consider disputes of parties arising from a non existent contract In its motion to bifurcate proceedings into two phases filed on 26 May 2004 GOP had made it clear that its stand was that the Agan decision necessarily nullified the parties reference to ICC Arbitration contained in that agreement Thus the Tribunal was faced with a classic challenge to its jurisdiction ie that there was no basis for such jurisdiction since the jurisdiction clause had allegedly died with the main contract Yet at the same time the Tribunal was being asked to consider what law governed the arbitration agreement and what law governed the procedure of the Tribunal In this situation it appears to me that it was a prerequisite for the Tribunal to consider whether the arbitration agreement could be separated from the main contract and survive despite the alleged nullity of the main contract or whether it had been extinguished with its parent If the principle of severability was not available to the Tribunal then it would have been pointless for the Tribunal to go on to consider the two questions that it had been asked to determine I therefore agree with the submission made by PIATCO that consideration of this principle was a necessary ingredient in the Tribunal s reasoning It was also necessary for the Tribunal in its deliberations to consider whether the arbitration clause was severable in the sense that it could be governed by a law that was different from that which governed the main contract There is no doubt that that aspect of severability was in GOP s contemplation because it did address arguments aimed at establishing that the parties could not in any event have intended the arbitration agreement to be governed by Singapore law 29 PIATCO argued that in its submissions before the Tribunal GOP had dealt with severability in substance even if it had not used that precise word First there was the wording in the 26 May 2004 submission that I have already cited Then in paras 8 to 14 of its submissions of 20 August 2004 GOP in giving various reasons why Philippine law properly governed both the arbitration agreement and the arbitration proceedings had argued in substance that the arbitration clause was so much at one with the contract struck down that it had to die with it It had also recognised in those submissions that there were six discrete choice of law issues that could arise in an international arbitration and in that connection had identified three of these issues as being the proper law of the contract the proper law of the arbitration agreement and the law governing the arbitral procedure In these circumstances PIATCO said that there could be no serious doubt that the issue of severability was not lost on GOP when it made its submissions Indeed the contrary was true and GOP was actually arguing against severability The submissions of 20 August 2004 were replete with an implicit acceptance that the arbitration agreement was severable from the main contract The thrust of GOP s submissions was to argue that Philippine law applied to both 30 I find merit in those submissions by PIATCO and do not accept GOP s response that all it had been doing was to urge the Tribunal to find that a proper application of the choice of law principles in this case meant that the arbitration agreement was governed by Philippine law The Tribunal when it considered the six discrete choice of law issues put forward by GOP commented that these paragraphs of GOP s submissions reflected a change in GOP s original position that the principle of severability did not apply in the Philippines because under Philippine law a clause in a contract in
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PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA [2006] 1 SLR 197; [2005] SGHC 197
and d the requisite majority was allegedly not achieved at the February 2000 meeting The notice of arbitration leading to the Previous Arbitration was issued in March 2001 6 In the course of the Previous Arbitration the tribunal the Previous Tribunal dealt with and considered the following issues a whether any obligation arose under the BI Notes to make payment to the respondent b whether the obligations under the BI Notes were restructured pursuant to the February 2000 meeting and c whether by reason of sovereign immunity the applicant could not be brought before the Previous Tribunal 7 The Previous Arbitration was heard on 7 June 2001 In October 2001 the Previous Tribunal issued an award granting the respondent s claim the Previous Award and ordering the Issuer and the applicant to pay the respondent a sum in excess of US 8 6m 8 In the meantime the Issuer had convened a further meeting of holders of BI Notes alone to ratify the resolutions passed at the February 2000 meeting On 19 April 2001 the Issuer gave notice that it intended to call a meeting for the purpose of passing inter alia the following resolutions a that the resolutions passed at the February 2000 meeting be ratified b that the BI Notes be exchanged for MCP Notes c that the applicant be released from its obligations under the guarantee and d that the respondent and certain other parties cease their arbitration actions against the Issuer and the applicant and lift an injunction that they had obtained against these parties from the Singapore court 9 The ratification meeting was first held on 18 May 2001 Only one Noteholder PT Bhakti Investama PT Bhakti attended it PT Bhakti held US 46m of the BI Notes amounting to 46 of the BI Notes issuance This was insufficient to form a quorum under the relevant documentation which specified a quorum of one or more persons holding BI Notes of not less than two thirds in nominal value of the BI Notes outstanding The ratification meeting was thus adjourned 10 The adjourned meeting was held on 4 June 2001 the June 2001 meeting Once again only PT Bhakti attended it As this was an adjourned meeting however PT Bhakti s attendance was sufficient to constitute the quorum The documentation provided that persons holding not less than one third in nominal amount of the BI Notes outstanding would constitute the quorum at an adjourned meeting Upon a vote being taken PT Bhakti voted to approve the resolutions put before the meeting In August 2001 the Previous Tribunal was sent a note of the June 2001 meeting This note was actually the minutes of the meeting and contained the names of the persons who attended the meeting and the resolutions passed at the meeting The note was accompanied by a cover sheet addressed to one of the arbitrators and which simply described the contents of the note without more 11 The respondent did not attend the June 2001 meeting Through counsel the respondent had objected to the proposed ratification meeting on the grounds that it would allegedly be in violation of an injunction obtained by certain BI Noteholders in the High Court of Singapore and also that the Restructuring Scheme itself was in violation of the terms of the BI Notes The injunction had been obtained on the basis of an allegation that contractual terms relating to meetings of holders of the BI Notes had not been complied with in respect of the February 2000 meeting 12 On 25 July 2001 the applicant made an application to this court to discharge the injunction so as to allow the holders of the BI Notes to proceed with the Restructuring Scheme Although the application to discharge the injunction was not granted the court on 27 September 2001 observed that the Issuer was not precluded from taking steps that might render the BI Notes void or ineffective as long as such steps were taken in accordance with the governing documentation The court also stated that it made no finding on the issue of the validity or effectiveness of the ratification meeting The respondent continued to dispute the validity of the June 2001 meeting and the resolutions passed on that date Proceedings in the present arbitration 13 On 10 January 2002 the applicant issued a notice of arbitration against the respondent and three other holders of the BI Notes ie those noteholders who had obtained the injunction in Singapore By this notice the applicant sought as against all the other four parties including the respondent a declaration that a the June 2001 meeting was valid and binding on all holders of the BI Notes including the respondent and b the Restructuring Scheme was valid and binding on all the holders of the BI Notes including the respondent As a result of this notice the Arbitration was commenced and on 10 October 2002 the SIAC appointed a three man arbitration tribunal the Tribunal comprising Mr V K Rajah as chairman Mr Roderick Martin and Mr Gabriel Peter 14 A preliminary meeting was held on 12 November 2002 On the respondent s application the Tribunal ordered that the following issues be tried as preliminary jurisdictional issues a whether the Tribunal had jurisdiction to entertain the Arbitration in the light of the history of the Previous Arbitration and b whether the divestment by MCP of its shares in CAP would prevent the applicant from proceeding with the Arbitration The Tribunal gave directions on the filing and service of written submissions by both parties The Tribunal also ordered that oral submissions be heard on 11 February 2003 15 For some reason the submissions were not presented by the original deadlines and no hearing took place on 11 February 2003 Instead on 30 July 2003 the respondent made further allegations to the effect that the arbitration proceedings were allegedly moot and ought to be discontinued because the respondent had disposed of its holdings in the BI Notes On 20 August 2003 the Tribunal directed the applicant to respond to these allegations In September 2003 both parties filed their written submissions on the new allegations In October 2003 the Tribunal gave further directions in relation to the submissions on the preliminary objections These were filed by the respondent on 23 October 2003 and by the applicant on 17 November 2003 16 To the great surprise of the applicant the Tribunal issued an award determining the preliminary issues on 5 December 2003 without calling for an oral hearing It is this award that the applicant seeks to set aside The Award and the Previous Award 17 In the Award the Tribunal set out the following issues as determinative of the preliminary questions relating to jurisdiction 5 ISSUES 5 1 Whether the claim against the respondent is moot now that the respondent has disposed of its BI Notes 5 2 Whether the divesting of MCP s shares in CAP prevents the applicant from proceeding in these proceedings 5 3 Whether the Tribunal has jurisdiction to entertain the present proceedings in the light of the history of the earlier proceedings of the parties 18 On the first and second issues the Tribunal found in favour of the applicant On the third issue the Tribunal found against the applicant Following from this finding the Tribunal held at para 8 1 of the Award As the applicant has failed on the third issue it is the decision of this Tribunal that the Respondent succeeds on the preliminary question of jurisdiction and the applicant s action is hereby dismissed The Tribunal also made consequential orders that the costs of the Arbitration and the respondent s costs be taxed by the registrar of the SIAC and be paid by the applicant to the respondent 19 To understand the arguments presented before me on the Originating Motion to set aside the Award it is necessary to have some knowledge of the findings of the Previous Tribunal as contained in the Previous Award The most relevant parts of the Previous Award read as follows 2 3 The first respondent i e the Issuer is not represented and has taken no part in the arbitral proceedings 2 4 The second respondent i e the applicant is not represented and has not appeared at the arbitral hearings but as discussed in more detail below sent a lengthy letter to the SIAC and the Chairman on 23 May 2001 The letter expressed the view that the Tribunal ought to refuse to hear the proceedings on the ground of sovereign immunity and also argued that the second respondent was entitled to the defence of sovereign immunity This letter was signed by Dhulkifli Zaman Khan Consultant Attorney 2 5 After the hearing on Thursday 7 June 2001 referred to in paragraphs 9 4 et seq below the Tribunal was forwarded what purported to be a note of the Rekasaran BI Limited noteholders meeting of 4 June 2001 signed and made on 5 June 2001 The Tribunal finds that this documentation is irrelevant to the issues requiring determination in this arbitration 3 1 The claim before the Tribunal arises out of the respondents default under the terms of certain notes issued by the Rekasaran and guaranteed by Jasindo under the terms of a US 100 million debt issuance program in 1997 the Rekasaran BI Notes The respondents have not challenged the actual defaults they are claimed to have committed under the various contracts 3 2 It appears that the respondents only two possible defences to the claim are first that the default was cured by a purported exchange offer for the Rekasaran BI Notes which purportedly would have entailed a release of Jasindo s guarantee of the Rekasaran BI Notes It was argued by the applicant in SIAC ARB 47 2000 that this exchange offer was not approved by the requisite majority of noteholders was not put to a vote in accordance with the terms and conditions of the Rekasaran BI Notes and as such is null and void This defence is discussed below The Tribunal has decided to consider it even though it has not been raised specifically in these proceedings 3 3 The second possible defence raised in the letter of 23 May 2001 to the SIAC and the Tribunal is that Jasindo is immune from these proceedings pursuant to the United Kingdom State Immunity Act of 1978 The challenges mounted by the applicant 20 The grounds of the application are four fold They are that a the Award is in conflict with the public policy of Singapore thus leading to a breach of Art 34 2 b ii of the UNCITRAL Model Law on International Commercial Arbitration the Model Law which has been made a part of Singapore law by the International Arbitration Act Cap 143A 2002 Rev Ed the Act b the Award deals with disputes or issues not contemplated by or alternatively not falling within the terms of the submission to arbitration and or contains decisions on matters or issues beyond the scope of the submission to arbitration thus leading to a breach of Art 34 2 a iii of the Model Law c a breach of natural justice under s 24 b of the Act has occurred in connection with the making of the Award by which the rights of the applicant have been prejudiced and d the applicant was not given a full opportunity to present its case and or was otherwise unable to present its case thus leading to a breach of Arts 34 2 a ii and 18 of the Model Law I will deal with each ground in turn The public policy ground 21 The applicant s case in relation to this ground is that certain findings in the Award which the applicant termed critical findings were directly contrary to the findings made by the Previous Tribunal in the Previous Award and to that extent the critical findings were in conflict with the public policy of Singapore that findings in arbitral awards are final and binding In other words the Award had ignored the findings made by the Previous Tribunal and as such ought to be set aside 22 The findings in the Award that the applicant identified as critical findings are the following a the statement in para 7 23 of the Award that it was clear from the Previous Award that the applicant chose not to participate in the Previous Arbitration b the statement in para 7 23 of the Award that the June 2001 meeting would have been directly relevant for the Previous Tribunal to consider because the Previous Tribunal had found that the February 2000 meeting had been improperly convened and the applicant s position was that the June 2001 meeting was to ratify the resolutions passed at the February 2000 meeting and c the finding in para 7 28 of the Award that the applicant was estopped from raising the issue of the June 2001 meeting as this was an issue which might have been and should have been brought forward as part of the Previous Arbitration but was not brought forward by the applicant 23 The applicant acknowledged in its submissions that in order to set aside the Award on the ground that it was in conflict with the public policy of Singapore it had as prescribed by Choo Han Teck J in John Holland Pty Ltd v Toyo Engineering Corp 2001 2 SLR 262 John Holland to first identify the public policy and then show which part of the Award conflicted with it In this respect the applicant submitted that the public policy that was breached by the Award was that set out in s 19B of the Act This reads 1 An award made by the arbitral tribunal pursuant to an arbitration agreement is final and binding on the parties and on any persons claiming through or under them and may be relied on by any of the parties by way of defence set off or otherwise in any proceedings in any court of competent jurisdiction 2 Except as provided in Articles 33 and 34 4 of the Model Law upon an award being made including an award made in accordance with section 19A the arbitral tribunal shall not vary amend correct review add or revoke the award 24 The applicant further submitted that the Tribunal by its critical findings had in effect varied amended corrected or reviewed that part of the Previous Award that related to the critical findings and had thereby failed to give effect to the final and binding nature of the Previous Award This was because comparing paras 2 3 2 4 and 2 5 of the Previous Award with the Tribunal s findings in paras 7 23 and 7 27 of the Award there were clear inconsistencies between the two 25 Firstly the Previous Tribunal had expressly stated in the Previous Award that after the hearing on 7 June 2001 it had been handed a note about the June 2001 meeting The Previous Tribunal then expressly found that this note was irrelevant to the issues requiring its determination This finding must be given due deference as part of the final and binding Previous Award and was conclusive between the parties ie the applicant and the respondent Despite this however the Tribunal had chosen to make a completely contradictory finding when it ruled that the issue of the June 2001 meeting was directly relevant for the Previous Tribunal to consider The applicant submitted that the Tribunal had no right to overrule the Previous Tribunal s decision and by doing so had varied or amended the Previous Award contrary to s 19B of the Act 26 Secondly having found that the issue of the validity of the June 2001 meeting was relevant to the Previous Tribunal the Tribunal considered whether the applicant could and should have raised that issue before the Previous Tribunal The Tribunal had then gone on to find as a matter of fact that the applicant ought to have raised the issue before the Previous Tribunal but that because it had failed to formally participate in the Previous Arbitration it had failed to raise the said issue This finding that the applicant had failed to participate in the proceedings had conflicted with that of the Previous Tribunal which had specifically distinguished the positions taken by the applicant and the Issuer in the Previous Arbitration The Previous Tribunal found in para 2 3 of the Previous Award that the Issuer had not taken any part in the arbitral proceedings but in para 2 4 it noted that whilst the applicant had not appeared at the arbitral proceedings it had sent a lengthy letter to the SIAC and the chairman of the Tribunal It had also acknowledged in para 2 5 of the Previous Award that a note of the meeting of June 2001 had been forwarded to the Previous Tribunal 27 The applicant further submitted that the findings of the Tribunal were repugnant and directly contrary to the findings made by the Previous Tribunal and thereby again in breach of s 19B of the Act Further the Tribunal purported to interpret the Previous Award in a manner that was so repugnant to the obvious and clear findings of the Previous Tribunal as to make a mockery of the effect of the Previous Award The applicant said that such findings were clearly against public policy that required the findings made in arbitration proceedings to be final and binding between the parties 28 The respondent submitted that there was no basis for the applicant s contention that the Award was contrary to public policy Relying also on the principle set out in John Holland 23 supra it stated that no particular public policy had been identified other than the reference to the fact that findings made in arbitration proceedings must be final and binding pursuant to s 19B of the Act Finality of arbitration was however a matter of law and not public policy Also the applicant s contention was no different from that in John Holland where the contention was that there had been a fundamental irregularity in respect of the law which contention was rejected as a ground on which the Award could be set aside 29 Having considered the arguments I find myself in agreement with the contention that the attack on the Award as being contrary to the Previous Award is an attack that has its foundation in a dissatisfaction with the way in which the legal principles encapsulated in s 19B of the Act seem to have been ignored rather than an attack founded on the ground of public policy Whilst I do not doubt that a matter of public policy may be expressed in a legal provision ie the public policy may be given legislative effect by being enacted as a law this does not mean that every law has to be regarded as public policy so that if it can be shown that any finding in an arbitration award constitutes a breach of such law that arbitration award would have to be set aside on the ground of public policy If I were to make such a holding it would prove such a fertile basis for attacking arbitration awards as to completely negate the general rule at least in so far as international arbitrations covered by the Act are concerned that awards cannot be set aside by reason of mistakes of law made by the tribunal Further in the context of this case whilst it is obviously not desirable to have conflicting arbitral decisions existing on the very same dispute between the same parties I do not see any public policy implication in such a state of affairs existing between private parties nor has the applicant identified any such implication The applicant was content to state that because the Award appeared to disregard s 19B of the Act it was against public policy without substantiating any public policy that the section had been enacted to implement 30 From my perspective the purpose of s 19B 1 is to make it clear and beyond dispute that each party to an international arbitration is bound by the award made by the tribunal and cannot challenge it except on the limited grounds set out in the Act and the Model Law This means that even if the tribunal has made a mistake of fact or of law there is no recourse against that decision and the parties are bound by it The finality given to an award by s 19B 1 also ensures that such award would be enforceable by the successful party as generally speaking enforcement of judgments or awards can only be carried out when the same are final and not provisional or subject to appeal The corollary to an award being final and binding on a party is that that party cannot reopen the same issue in further arbitration or court proceedings The provisions of the Act also provide avenues by which parties may ensure that a binding decision rendered by one arbitral tribunal is not subsequently contradicted by another decision made by a second tribunal If the same issue is dealt with for a second time in further arbitration proceedings then the second set of proceedings may be considered to be in breach of s 19B 1 If that is the case then the remedy for the aggrieved party is either to challenge the jurisdiction of the second tribunal or to obtain an injunction against the continuation of the second set of proceedings If the second tribunal deals with the challenge to its jurisdiction by ruling that it has jurisdiction then that ruling can be challenged in court under the provisions of Art 16 3 of the Model Law On the other hand if the second tribunal rules that it has no jurisdiction because the issue in question had been finally decided by a prior arbitration between the same parties then the aggrieved party can try to have that ruling set aside on one of the grounds set out in Art 34 of the Model Law apart from the public policy ground or in s 24 of the Act Beyond the scope of submission to arbitration 31 The applicant submitted that the original submission to the Arbitration contained only the question of the validity of the June 2001 meeting In hearing the respondent s objections on jurisdiction as a preliminary issue the Tribunal had chosen to consider two issues which were determinative of the objection to jurisdiction namely a whether the validity of the June 2001 meeting was relevant to the issues that required determination at the Previous Arbitration and b whether the applicant had raised the issue with the Previous Tribunal 32 The applicant accepted that these issues were relevant considerations for the application of the principle of estoppel It argued however that both the issues had already been decided by the Previous Tribunal in that a the Previous Tribunal had determined that the validity of the June 2001 meeting was irrelevant to the issues requiring determination in the Previous Arbitration and b whilst the applicant had sought to raise the validity issue through its note of 5 June 2001 to the Previous Tribunal the Previous Tribunal had declined to consider the note In these circumstances the Tribunal could not make its own findings on the said issues or replace the findings of the Previous Tribunal with its own Such issues were beyond the scope of the Arbitration as they had already been decided on in the Previous Arbitration and were factual findings that were binding on parties pursuant to s 19B of the Act As such the Tribunal did not have the jurisdiction to make any finding on these issues 33 The applicant added that the respondent had not sought a finding on the issue of the relevance of the June 2001 meeting as it was aware of the decision of the Previous Tribunal on this issue As such the respondent did not rebut the applicant s submissions that the Previous Tribunal had already ruled on the issue of relevance and found the June 2001 meeting to be irrelevant to the issues in the Previous Arbitration The applicant said that it had expressly raised this argument in the course of the proceedings in the present arbitration and the respondent had not rebutted it or even commented on the issue of relevance Hence there being no dispute on the issue of relevance there was no basis for the Tribunal to consider it 34 In response the respondent pointed out that under r 26 of the SIAC Rules 2nd Ed 22nd October 1997 the Present Tribunal had the power to rule on its own jurisdiction and it had dealt with the respondent s preliminary objection on jurisdiction pursuant to this rule The finding by the Present Tribunal as to whether the applicant had raised the issue of the June 2001 meeting was integral to the determination on jurisdiction as a preliminary issue In the same way the finding on the relevance of the issue to the Previous Tribunal was necessary in the determination of whether the applicant could and should have raised such an issue at the Previous Tribunal The respondent also said that it had made submissions on the issue of relevance to the Tribunal It pointed to the submissions that it had placed before the Tribunal in October 2003 in which it had said that although the question of the validity of the resolutions passed at the June 2001 meeting was not decided in the Previous Arbitration that was not dispositive of the application of issue estoppel Instead what was dispositive was that it could not be gainsaid that that issue was one which properly belonged to the subject of the litigation and which the parties exercising reasonable diligence might have brought forward at that time Further the applicant had had every opportunity to bring that issue forward before the Previous Tribunal 35 In my view it cannot be gainsaid that the Tribunal had the power to determine its own jurisdiction under the SIAC Rules which in this respect reflect Art 16 1 of the Model Law The question before me is whether in determining that jurisdiction the Tribunal had the power to decide issues that had already been decided by the Previous Tribunal In my judgment it did not If in the course of determining its jurisdiction the Tribunal encountered an issue that had already been decided by the Previous Tribunal it had no authority to determine that issue afresh but because the parties themselves were bound by the decision of the Previous Tribunal on that issue the Tribunal had also to consider itself bound by that decision and proceed on such basis The question that next arises is whether in determining that it had no jurisdiction the Tribunal in fact re decided any issue that had already been decided by the Previous Tribunal 36 As would be apparent from the earlier discussion the applicant s position was that two issues that had already been decided by the Previous Tribunal were decided again by the Tribunal These were the issues of the participation of the applicant in the Previous Arbitration and the relevance of the June 2001 meeting to the Previous Arbitration 37 As regards the first of these the Tribunal made two references to the issue In para 7 23 of the Award the Tribunal said it is clear from the Previous Award that the applicant chose not to participate in the Previous Arbitration Next in para 7 27 of the Award the Tribunal repeated that it is clearly stated in the Previous Award that the applicant did not participate in the Previous Arbitration for reasons best known to it The importance of that finding is that it was part of the Tribunal s reason for rejecting the assertion of the applicant that it had attempted to raise the issue of the June 2001 meeting before the Previous Arbitration 38 In my opinion however although the Tribunal had quoted paras 2 3 and 2 4 of the Previous Award in the Award it had for some reason drawn the wrong conclusion from these paragraphs Paragraph 2 3 of the Previous Award stated that the Issuer had taken no part in the Previous Arbitration whereas para 2 4 stated that the applicant was not represented and had not appeared at the hearings of the Previous Arbitration but had sent a lengthy letter to the Previous Tribunal giving reasons why the Previous Tribunal ought not to hear the Previous Arbitration For a party to an arbitration proceeding to participate in that proceeding it is not necessary for the party to be represented or to appear in person at the hearings of the tribunal If the party communicates with the tribunal on any matter relating to the proceedings including the issue of whether the tribunal has jurisdiction to hear the arbitration such communications would be regarded as participation albeit limited participation in the proceedings In this case the Previous Tribunal in para 2 4 of the Previous Award was careful to indicate the manner in which the applicant had been involved in the Arbitration and in contrast to the statement it made in relation to the Issuer did not conclude that the applicant had taken no part in the Previous Arbitration Its view was as para 2 4 of the Previous Award made clear that the applicant had participated to a limited extent in the Previous Arbitration Thus in making the blanket statement that the applicant had chosen not to participate in the Previous Arbitration the Tribunal was coming to a conclusion that was contrary to the considered opinion of the Previous Tribunal It was not entitled to come to such a contrary conclusion 39 The Tribunal found in para 7 23 that the meeting of June 2001 would have been directly relevant for the Previous Tribunal to consider This holding supported its subsequent conclusion that the applicant should have raised the issue of the June 2001 meeting before the Previous Arbitration and since it did not it was estopped from raising it before the Tribunal and thus the Tribunal had no jurisdiction to consider the validity of the June 2001 meeting The Previous Tribunal had stated in para 2 5 of the Previous Award that it found that documentation purporting to be a note of the June 2001 meeting was irrelevant to the issues requiring determination in the Previous Arbitration The applicant said that this finding meant that the validity of the June 2001 meeting was not relevant to the Previous Arbitration The respondent replied that what the Previous Tribunal had decided was that it was the note that was not relevant to the Previous Arbitration and the Previous Tribunal had made no finding as to whether the validity of the June 2001 meeting was relevant to its determination The applicant s rejoinder was that such an interpretation of the language used by the Previous Tribunal meant that the Previous Tribunal did not read or understand the contents of the note and as such only commented on the physical document The applicant said that it could not however be seriously alleged that the Previous Tribunal did not understand the purport of the note as the same plainly referred to ratification of the February 2000 meeting and the Restructuring Scheme and further later in the Previous Award the Previous Tribunal made express reference to Resolution 2 F passed at the June 2001 meeting If indeed the Previous Tribunal had only ruled on the irrelevance of the physical document as compared to the irrelevance of its contents the question that arose was why there was a need to rule on the relevance or otherwise of the physical document 40 In my judgment in stating that the note of the June 2001 meeting was irrelevant to the issues requiring determination in the Previous Arbitration the Previous Tribunal must have been aware of the contents of the note for the reasons given by the applicant and was stating that what had been effected at the June 2001 meeting was not relevant to the issues before it It is perfectly understandable why the Previous Tribunal should have taken that stand The Previous Arbitration commenced in March 2001 and the main issue to be determined there was whether the February 2000 meeting had been properly convened and as a consequence whether the resolutions passed at the February 2000 meeting were valid and binding on the Noteholders The respondent filed evidence before the Previous Tribunal in support of its claim in April and May 2001 and filed submissions on 1 June 2001 and on 6 June 2001 The applicant sent its letter claiming sovereign immunity on 23 May 2001 By the date of the hearing on 7 June 2001 the issues before the Previous Tribunal were as stated in those submissions and the letter No other issues were raised at the hearing or thereafter Although it sent the Previous Tribunal the note the applicant did not formally raise the resolutions passed at the June 2001 meeting as an answer to the respondent s contention that the resolutions passed at the February 2000 meeting did not bind it Accordingly the issue of the effect of the June 2001 meeting on the earlier meeting was not before the Previous Tribunal for determination and that was all that the Previous Tribunal was saying when it found that the documentation was irrelevant to the issues requiring determination by it The Previous Tribunal was not stating that the issue had been raised nor was it stating that the issue could not have been raised 41 In this connection the exact wording of the Tribunal s finding is important The Tribunal did not say that the June 2001 meeting was relevant to the issues before the Previous Tribunal as the same had been formulated by the parties What the Tribunal said was that the June 2001 meeting would have been directly relevant ie it would have been relevant for the Previous Tribunal s consideration had it been raised by the applicant as an issue The Tribunal was also saying that by simply sending a note of the meeting to the Previous Tribunal without any accompanying submission or representation the applicant had not put the effect of the June 2001 meeting in issue In my judgment therefore this second finding of the Tribunal did not contradict the finding of the Previous Tribunal Whilst it may be argued though I express no concluded opinion on this that the Tribunal was wrong to find that the June 2001 meeting would have been relevant to the considerations of the Previous Tribunal had it been raised because this was arguably an issue which was not within the jurisdiction of the Previous Tribunal to determine such a wrong finding on the part of the Tribunal would not be a ground for setting aside the Award This is not an appeal and pursuant to the provisions of the Act errors of law or fact made by the Tribunal do not entitle the court to set aside the Award 42 Moving back to my conclusion on the first issue although I have found that it was not within the jurisdiction of the Tribunal to conclude that the applicant did not participate in the Previous Arbitration this does not mean that the Award should be set aside According to Art 34 2 a iii of the Model Law if an award contains decisions on matters beyond the scope of the submission to arbitration if the decisions on matters submitted on arbitration can be separated from those not so submitted only that part of the award which contains decisions on matters not submitted to arbitration may be set aside Reading the Award as a
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Yee Hong Pte Ltd v Powen Electrical Engineering Pte Ltd [2005] 3 SLR 512; [2005] SGHC 114
to exchange affidavits of evidence in chief but not Yee Hong In his view Yee Hong s last minute demands for further documents and further and better particulars were plainly excuses to delay proceedings 10 I should mention that Powen s general manager Wong Chiu Yin Wong in his affidavit of 18 January 2005 stated that the reason earlier given to Powen for the first extension of time to exchange affidavits ie from 17 December 2004 to 7 January 2005 was that the applicant s representatives were travelling during that period and more time was needed to finalise the affidavits This was not disputed by Yee Hong 11 Wong further deposed that further discovery of four categories of documents see 13 were not pursued by Yee Hong after AsiaLegal s fax of 24 November 2004 objecting to discovery on the ground of relevancy Earlier on 19 November 2004 Rajah Tann said that they would go ahead to apply for further discovery if they did not hear positively from AsiaLegal by the close of business on 24 November 2004 No application for further discovery was taken out despite Powen s position on the matter It was brought up again on 7 January 2005 in Rajah Tann s fax the very day the parties were expected to exchange affidavits of evidence in chief As for the request for further and better particulars of the Statement of Claim the request was made for the first time on the day fixed for exchange of affidavits and that was close to a year after the Statement of Claim was submitted way back in February 2004 12 Rajah Tann said that they tried to call Ms Wendy Leong of AsiaLegal about further discovery of the four categories of documents on 30 December 2004 but they were told that she was on leave until 7 January 2005 Wong in his affidavit deposed that Ms Wendy Leong was away from 22 December 2004 to 5 January 2005 but counsel Mr Jeya Putra was in the office between those dates and in particular on 30 December 2004 when Rajah Tann telephoned AsiaLegal Mr Jeya Putra received no call from Rajah Tann on 30 December 2004 and the latter left no message with AsiaLegal 13 LHE deposed that at the hearing on 10 January 2005 the arbitrator was informed of three outstanding issues First copies of some documents previously disclosed had not been made available to Yee Hong They were identified as documents that Yee Hong was entitled to before the exchange of affidavits of evidence in chief Second Yee Hong had earlier on 29 October 2004 requested six categories of documents but Powen had only provided on 19 November 2004 two categories leaving four categories of documents outstanding The outstanding four categories of documents were a any applications for and or grants of extension of time made pursuant to cl 11 of the Conditions of Sub contract for use in conjunction with the Main Contract b the Sub contract Completion Certificate issued pursuant to cl 11 of the Conditions of Sub contract for use in conjunction with the Main Contract c All M E site records memoranda reports like test reports and commissioning reports and other documents on the status of the progress of the M E works for the project and d The report made by Powen s expert The third outstanding issue was Yee Hong s request for further and better particulars 14 On 10 January 2005 Mr Edwin Lee also pointed out AsiaLegal s position that the four categories of documents were not relevant and thus not discoverable Mr Jeya Putra had not said that the documents were not in Powen s custody possession and or power The arbitrator queried Mr Jeya Putra whether Powen had the documents Mr Jeya Putra said he would take instructions but the appropriate thing was for Yee Hong to take out a formal application for further discovery if that was what Yee Hong desired 15 LHE deposed that at that hearing Mr Edwin Lee informed the arbitrator that Yee Hong would be making a formal application for further discovery as well as to seek an extension of time for exchange of affidavits of evidence in chief Wong in his affidavit stated that the tribunal directed that such application if any be fixed for hearing on the first day of the arbitration Again this point was not disputed by Yee Hong 16 After the conclusion of the hearing on 10 January 2005 the arbitrator by way of confirmation issued Directions No 1 dated 11 January 2005 It is useful to set out the directions in full After carefully considered the oral submissions of Mr P Jeya Putra Counsel representing the Claimants and Mr Edwin Lee and Ms Looi Ming Ming Counsel representing the Respondents at the interlocutory meeting held in my office on 10 January 2005 at 6 30pm I hereby order and direct the following 1 The Counsel for the Claimants is to forward the documents listed as Nos 339 348 to 352 359 366 387 to 389 393 423 442 and 443 to the Respondent s Counsel by 10 00am on 11 January 2005 as confirmed by the Counsel representing the Claimants 2 As agreed by the Counsel representing the Claimants he is to confirm on 10 January 2005 by 10 00am the availability of the other documents under Paragraph 5 of the Counsel for the Respondents letter dated 7 January 2005 addressed to the Claimants Counsel If such documents are available then the Claimants Counsel is to forward copies of such documents to the Respondents Counsel notwithstanding the fact that the latter party may have them in their possession 3 The Counsel for the Respondents upon the receipt from the Claimants Counsel of the documents listed as Nos 339 348 to 352 359 366 387 to 389 393 423 442 and 443 is to confirm by 3 30pm on 11 January 2005 the relevancy of such documents in their preparation for the Witness Statements Affidavits of Evidence in Chief to be exchanged The cost of this Order shall be equally borne by both the Claimants and the Respondents 17 By way of explanation para 5 of Rajah Tann s letter dated 7 January 2005 referred to in Directions No 1 relates to the four categories of documents set out in 13 above As for items 1 and 3 of Directions No 1 Rajah Tann in their earlier letter of 7 January 2005 categorically stated However the documents requested in our letter to you dated 24 December 2004 are still outstanding Kindly let us have a copy each of the same as soon as possible as the documents are essential for the preparation of the witness statements of evidence in chief Naturally the arbitrator wanted to hear further from Mr Edwin Lee since he had blamed Yee Hong s inability to exchange affidavits on Powen s delay in making available copies of some disclosed documents On 10 January 2005 the deadline for exchange had expired and there was no application before the arbitrator for time extension The hearing was scheduled to start in nine days Powen was ready to press ahead 18 Mr Jeya Putra complied with item 1 of Directions No 1 by 0858 hours of 11 January 2005 He also wrote to Rajah Tann on the same day informing them that of the four categories of documents the documents either did not exist or that Powen did not have them in its custody possession and or power 19 Contemporaneously Mr Jeya Putra also informed the arbitrator that the documents under item 1 were sent to Rajah Tann as directed by the arbitrator At the same time Mr Jeya Putra pointed out to the arbitrator that the documents he had sent were documents which Yee Hong should have had as they were documents which Yee Hong had disclosed in its own list of documents in Suit No 814 of 2003 commenced in the High Court on 6 October 2003 The same list of documents disclosed in Suit No 814 of 2003 was also disclosed by Yee Hong in this arbitration Mr Jeya Putra complained that B y requesting at the doorstep of this reference for copies of documents which they clearly already have in their possession and contending that they require these documents which they already have to prepare their Affidavit of Evidence In Chief is wholly without merit and purely designed to delay proceedings No prejudice has been caused to Yee Hong as they are already in possession of the documents requested for above 20 Responding to item 3 of Directions No 1 Rajah Tann in their letter of 11 January 2005 to the arbitrator stated Separately we have also since had a quick perusal of the documents that were forwarded to us These include minutes of Meetings and Consultants Instructions which are surely relevant to the claim While similar copies of these documents may have been in our clients possession the documents disclosed by the Claimants are different in that some of them contain handwritten notes In any event it is not entirely relevant whether similar documents are already in our clients possession the simple position is that our clients are entitled to these documents and are entitled to peruse them before preparing their affidavits 21 Following the replies from both sides to Directions No 1 the arbitrator issued on the same day at 1801 hours an order entitled Peremptory Order to Respondents ie Yee Hong in these terms I made an Order in my letter of 16 December 2004 in which I set the deadline for the exchange of the Witness Statements Affidavits of Evidence in Chief to be on 7 January 2005 From the letter dated 7 January 2005 from the Claimants Counsel I came to know that they quote have just been notified by the Respondents that they are not in a position to exchange the Affidavits today unquote The Claimants Counsel had said in the same letter that the Claimants Powen are in a position to exchange the Affidavits on that day which was 7 January 2005 I have also noted that up to 7 January 2005 the Respondents have not made an application for the extension of the deadline for the exchange of the said Affidavits An interlocutory meeting was then held in my office on 10 January 2005 at 6 30pm and an Order for Directions has been issued to both the Claimants Counsel and the Respondents Counsel on 11 January 2005 On the morning of 11 January 2005 the Claimants Counsel had delivered to the Respondents Counsel the documents stated in item 1 of my Order for Directions No 1 Another letter dated 11 January 2005 was forwarded to me stating that the same documents were already disclosed by the Respondents in the List of Documents in their Suit No 814 of 2003 H in the High Court of Singapore In regard to the other documents as requested by the Respondents the Claimants Counsel in his letter dated 11 January 2005 addressed to the Respondents confirmed that they are not in their possession I am not persuaded by the statement by the Respondents Counsel in his letter dated 11 January 2005 that quote In any event it is not entirely relevant whether similar documents are already in our client s possession the simple position is that our clients are entitled to these documents and are entitled to peruse them before preparing their affidavits unquote Although the Claimants have faulted in not releasing copies of the said documents to the Respondents Counsel earlier as requested the fact remains that those same documents are already in the possession of the Respondents As such I do not see the logic in the said Respondents statement and I conclude that the late submission of such documents by the Claimants Counsel could in no way affect the Respondents preparation of the Witness Statements Affidavits of Evidence in Chief I therefore hereby order that unless the Respondents make their exchange with the Claimants of their Witness Statements Affidavits of Evidence in Chief on or before 14 January 2005 Friday I shall not be taking into consideration the Respondents Witness Statements Affidavits of Evidence in Chief and I shall subsequently after the Hearing proceed to deliberate and make my award on the case without regard to the said submission The cost of this Order shall be borne by the Respondents 22 The arbitrator also issued very shortly thereafter Directions No 2 to the parties The directions were as follows After having carefully considered the written submissions dated 11 January 2005 by the Counsel representing the Claimants and the Counsel representing the Respondents I hereby state order and direct the following 1 The Claimants Powen have faulted in not forwarding the documents listed as Nos 339 348 to 352 359 366 387 to 389 393 423 442 and 443 to the Respondents Yee Hong as requested by the Respondents Counsel prior to the expiry date of 7 January 2005 and have instead only delivered the said documents to the Respondents Counsel on the morning of 11 January 2005 and had not confirmed earlier as requested by the Respondents Counsel that the other documents were not in their possession until 11 January 2005 2 The Respondents have failed to make application for an extension of the deadline expired on 7 January 2005 for the exchange of the Witness Statements Affidavits of Evidence in Chief The Respondents Counsel had said at the interlocutory meeting held in my office on 10 January 2005 at 6 30pm that he did not have the said documents mentioned in 1 above but the Claimants Counsel in his letter of 11 January 2005 had shown proof that such documents were already disclosed by the Respondents in the List of Documents in their Suit No 814 of 2003 H in the High Court of Singapore The Respondents Counsel in his letter dated 11 January 2005 did not deny that such documents are in the Respondents possession As my Peremptory Order dated 11 January 2005 issued to the Respondents orders that the Respondents to make the exchange of the said Affidavits with the Claimants on or before 14 January 2005 I hereby direct that the deadline for the exchange of the Witness Statement Affidavits of Evidence in Chief to be further extended to 14 January 2005 I also hereby directed that the dates for the hearing be re scheduled for 26 27 and 28 January 2004 instead of 19 20 and 24 January 2005 The cost of this Order shall be equally borne by both the Claimants and the Respondents 23 Mr Edwin Lee explained at the time the Peremptory Order and Directions No 2 were faxed through to his office he was in the midst of preparing the formal application for further discovery and was not aware of the arbitrator s orders and directions He was apprised of the situation after he had faxed through to the arbitrator at 1831 hours Yee Hong s application for further discovery Neither Yee Hong nor Rajah Tann contacted the arbitrator about the Peremptory Order and Directions No 2 They read the situation with grave misgivings and Rajah Tann on behalf of Yee Hong rushed off this originating motion which was filed the next day on 12 January 2005 An application to suspend the hearing of the arbitration pending the hearing of the application to remove the arbitrator was also sought 24 Yee Hong did not obtain an order to suspend the hearing when the application came up for hearing before me on 24 January 2005 I should also mention that the parties exchanged affidavits of evidence in chief on 14 January 2005 25 In the present case the arbitrator on 10 January 2005 was faced with a situation where in acting fairly to both parties he had to balance the consideration of progressing the reference against the need to afford Yee Hong a fair opportunity to test the case of the claimant and put forward its own defence This meant considering the three outstanding issues as highlighted to him by Mr Edwin Lee This balancing exercise is sometimes difficult where as here the arbitrator was faced with a party who had sought an earlier adjournment for exchange of affidavits of evidence in chief and who appeared tardy from the degree of alacrity with which Yee Hong had shown in making its applications As at 7 January 2005 Yee Hong had not applied for any extension of time to exchange affidavits of evidence in chief even though it was the last day for the exchange and Yee Hong was not ready and able to meet the deadline Yee Hong had not applied for further discovery even though Powen s position was made known as early as 24 November 2004 Yee Hong s request for further and better particulars of the Statement of Claim was also made on the very day fixed for exchange Along the way this request appeared to have been dropped as nothing more was said about it after Mr Jeya Putra s letter of 11 January 2005 These last minute demands were naturally viewed with suspicion by Powen and they were for the reasons below nothing more than delaying tactics 26 In my judgment it was clear that the arbitrator properly balanced the consideration to which I have referred in 25 above in a manner that could not be the subject of any arguable criticism of the kind advanced by Yee Hong In my view given the course the arbitration had taken and the material before the arbitrator on 11 January 2005 Lim was entitled to conclude and he had given reasons that there was no basis for not proceeding to hold the hearing on the substantive issues on the scheduled dates It is extremely undesirable if arbitrators were discouraged from approaching the situation presented to
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