United Engineers (Singapore) Pte Ltd v Northern Elevator Manufacturing Sdn Bhd

[1] United Engineers (Singapore) Pte Ltd (the Applicants) filed the above Notice of Motion (as amended) for leave to be granted to the Applicants to appeal on a question of law arising out of an Arbitration Award signed and published on 23 January 2003 (the Award) by Yang Yung Chong (the Arbitrator) in the above arbitration proceedings. If deemed appropriate, counsel sought leave of court for the Award to be remitted to the Arbitrator together with the Court's decision, judgment or opinion on the questions of law which forms the subject of this Originating Motion.

[3] The Arbitrator had also awarded to the Applicants the sum of $57,360/- for replacement of car rail brackets complete with fastening items and had accepted the unit rate of $240/- in Sin Ching Yong Engineering's (SCY) invoice for guide rail mounting brackets even though the aforesaid rate was for the provision of guide rail mounting brackets to a 18 kg lift and was therefore inconsistent with the Arbitrator's finding that the Respondents were liable to provide a 33 kg lift. The Arbitrator had determined and assessed the replacement works in a manner inconsistent with his determination of the Applicants' claim in that having found the Respondents liable to provide a 33 kg lift, there was no basis for him to use the unit rate for provision of a 18 kg lift.

[4] The question of law which arose was whether on the facts set out in the Award, there were any grounds upon which the Arbitrator could properly in law have assessed damages in the way he did.

[6] As the Respondents have appealed against the above orders (in Civil Appeal No. 57 of 2003), I shall set out the reasons therefor.

[7] The dispute between the parties which went to arbitration arose from an agreement dated 15 April 1995 made between the Applicants and the Respondents wherein the latter were engaged as the Applicants' specialist sub-sub-contractor for the design, manufacture, supply and delivery of passenger and cargo lifts to two (2) blocks of warehouses at Pandan Crescent/East Coast Highway in the lump sums of $1,992,000/- and $1,931,000/-.

[8] In the arbitration proceedings, the Applicants claimed damages from the Respondents for defective and or negligent design of the goods lifts as well as the sum of $1,586,804.67 for the Respondents' failure to supply parts, materials and equipment for the lifts. The Respondents disputed the Applicants' claim and counter-claimed inter alia for the (unpaid) balance due under the sub-contract.

[10] The second hearing of the arbitration dealing with quantum was held in September 2002 after which the Arbitrator delivered his second award on 23 January 2003.

[11] Counsel for the Applicants pointed out that the arbitration proceedings were governed by the old Arbitration Act Cap 10 (the old Act) as the Arbitration Act 2001 (the new Act) only came into operation on 1 March 2002; reliance was placed on the saving provisions under O 69 r 16 of the Rules of Court. The provisions which govern the right of appeal in the old Act are found in the following subsections of s 28:-

[12] She agreed that the court must also be satisfied that the appeal comes within The Nema guidelines applied by our appellate court in Hong Huat Development Co (Pte) Ltd v Hiap Hong & Co Pte Ltd [2000] 2 SLR 609. The Nema principles were laid down by the House of Lords in The Nema: Pioneer Shipping Ltd v BTP Tioxide [1982] AC 724 and in The Antaios: Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191.

[13] The guidelines laid down by Their Lordships in The Nema (and applied in The Antaios) on how leave should be granted in relation to the UK provision equivalent to our s 28 are as follows:-

[14] Counsel submitted that the Applicants' case satisfied The Nema principles and leave to appeal ought to be granted for the following reasons:-

Consequently, the question of law to be determined was whether on the facts set out in his second award, there were any grounds upon which the Arbitrator could properly at law have assessed damages in the manner he did. The question of law involved the Arbitrator's exercise and application of general principles governing award of damages. Hence, the appeal is not of a 'one-off' nature.

[16] Counsel also raised a preliminary objection to the Notice of Motion. She asserted that the application was filed late. She pointed out that the Arbitrator had given notice (by Lee & Lee's letter) on 16 January 2003 to both parties' counsel stating that the second interim award would be ready on Thursday 23 January 2003 for collection. The Applicants' Notice of Motion filed on 13 February 2003 was out of time. She relied on the Court of Appeal's decision in Hong Huat Development Co (Pte) Ltd v Hiap Hong & Co Pte Ltd [2002] 2 SLR 609 for her contention that the Applicants should have filed their application by 6 February 2003 i.e. within 21 days from 16 January 2003, as required under O 69 r 4(2) of the Rules of Court. The appellate court had held that under O 69 r 4(2) an award was made and published to the parties when the Arbitrator gave notice to the parties that the award was ready for collection, and not when they had notice of the actual contents of the award. Consequently she argued, the Applicants needed to first apply for an extension of time to file their Appeal.

[17] Howover, the Applicants' case did not fall within the principles enunciated in The Nema so as to warrant the court exercising its discretion in granting them leave to do so. Even if the Applicants' case came within The Nema principles, the court should not grant them leave to appeal as there was nothing wrong in the Arbitrator's award to indicate that he had 'obviously gone wrong' citing my previous decision in Jaya Offshore Pte Ltd v World Marine Co Ltd [1997] 2 SLR 109 in support.

[18] Counsel for the Applicants submitted that time ran from 23 not 16, January 2003. The first paragraph of Lee & Lee's aforementioned letter states:-

Counsel for the Applicants pointed out that had she gone to collect the Award from the Arbitrator on 16 January itself, she would not have received it as it would not have been ready. Consequently, she counted 21 days from 23 January 2003 and which expired on 14 February 2003, whereas she had filed the Notice of Motion a day earlier. On a plain reading of Lee & Lee's letter, I could not disagree with counsel's interpretation. The Final Award was in any case dated 23, not 16 January 2003.

[19] I granted the Applicants leave to appeal as I was of the view that the Arbitrator had erred in law on the amount of damages he awarded on their claim. It would be useful at this stage to set out the Arbitrator's interim as well as his final, awards. The relevant portions of the first award dated 21 December 2001 states:-

[20] In the final award dated 23 January 2003, the Arbitrator had awarded the following sums to the Claimants:-

[21] The Arbitrator set out the statement of account between the parties as follows:-

Deduct:

Add:

[33] kg/m guide rails and fishplates 72,367.52

brackets

I should mention that the Applicants have no quarrel with the Arbitrator's decision disallowing certain items they had claimed.

[22] I should also point out that the counterclaim sum in the above statement is incorrect; it should be $1,452,743.59 not $1,452,743.67. Be that as it may, it is a minor error and correcting it would affect all the other figures in the statement.

[23] It would also be useful to set out paras 44-52 of the Arbitrator's final award in full, although I had only remitted back to him for computation, the figures in his paras 46, 47, 50 and 52. The paragraphs read as follows:-

[24] It is to be noted from the above paragraphs that the Arbitrator did not accept the quotations and quantities stated by the Applicants' witnesses, he preferred the figures put forward by the Respondents in particular by their managing-director Koay. Whilst it is not/should not be the function of a court sitting in an appellate capacity to interfere in the findings of fact made by a lower court or tribunal, there was reason for the court to depart from the rule here and direct the Arbitrator to reconsider his computation of the sums awarded to the Applicants.

[25] In an earlier paragraph (no. 7) in his final award, the Arbitrator said:-

[27] I am in full agreement with the Arbitrator if by distinguishable in his para 7, he meant that the decision in Ruxley Electronics has no application to the facts of our case. Certainly, we are not concerned with loss of amenities. However, I would respectfully disagree with the Arbitrator if he meant that the compensatory nature of damages at law does not apply to the Applicants. That stance would be untenable, given the Arbitrator's findings that the Respondents had breached the contract with the Applicants by providing 18 kg instead of, 33 kg guide rails and safety devices. Consequent on the Arbitrator's finding, the Applicants should be reinstated to the position they would have been, if the Respondents had provided what was contracted; this he failed to do.

[28] As an example, I refer to two (2) of the items assessed by the Arbitrator. He had awarded the Applicants $64,000 for labour content for replacement works of 16 lifts. In that regard he had accepted the evidence of Elevator Service's Mr Chan (para 43 of his final award) that the labour charge would be $4,000 per lift. Yet he then proceeded to reject the Applicants' claim (in para 45) based on the quotation of Elevator Service, of $550 unit rate for the supply of both guide rails and fishplates preferring instead, the testimony and quotation of the Respondents' Koay, of $296.58 (US$166.62) for guide rails and $17.12 (US$9.62) for fishplates or a total of $183.74 for both items. In so doing, the Arbitrator overlooked the following factors:-

[29] Next, there is the Arbitrator's award of $57,360/- based on SCY's invoice price of $240 (x 239 pieces) for brackets and fastening items. Counsel for the Applicants pointed out that SCY's unit price was for 18 kg, not 33 kg lifts. I further note that the invoice was dated 12 February 1996 and not current. Indeed, the Applicants had tendered SCY's invoice for their claim for backcharges against the Respondents, for the supply of parts, materials and equipment. Consequently, the Arbitrator should not have relied on SCY's outdated invoice. Even if the Arbitrator thought (in his para 49) that Mr Tan from Elevator Service had not satisfactorily explained the increase of $30/- from an earlier quotation of $420/- as against the company's subsequent quotation of $450/- per set, for car rail brackets and combination car cwt rails brackets, he could have held Elevator Service to their earlier lower pricing and used the same. Quality as Mr Tan opined, would make a difference in pricing.

[31] Consequently, the Arbitrator would appear to have under-compensated the Applicants as their counsel submitted, going against the principle that damages for contractual claims should be compensatory (but not punitive) in nature.

[32] It was for the foregoing reasons that I directed that the sums set out in paras 46, 49, 50 and 52 of the Arbitrator's final award should be remitted back to him for re-computation.