Chong Long Hak Kee Construction Trading Co v IEC Global Pte Ltd

[1] This is an appeal by the defendant against the decision of Assistant Registrar Teo Hsiao-Huey who dismissed the defendant’s application for a stay of proceedings pursuant to an arbitration clause.

[2] In this action, the plaintiff claims $399,199.32 in respect of works carried out for the defendant under a written sub-contract dated 8 February 2003 which contains the following term:

[3] On 26 May 2003, this writ of summons was filed. It was served on the defendant two days later. On 3 June, the defendant entered an appearance in the action. On 18 June, at a pre-trial conference (‘PTC’) before the Registrar, the defendant indicated that it intended to file an application for stay of proceedings pursuant to the arbitration clause. Accordingly, no directions for the further conduct of the proceedings were given and the PTC was adjourned to 1 August 2003.

[4] On 20 June 2003, the plaintiff served a 48-hour notice on the defendant to file and serve the Defence failing which judgment in default would be entered. The defendant stated that having no other alternative to preserve its legal position, it filed its Defence and Counterclaim on 23 June 2003. Paragraph 1 of the Defence proclaims that the defendant was filing its defence without prejudice to its right to file an application to stay proceedings on the basis that the parties had agreed that the cause of action alleged in the Statement of Claim be referred to arbitration. The Counterclaim which begins at paragraph 9 states that the defendant repeats paragraphs 1 to 8 of the Defence. At the same time, the defendant filed the present application for a stay of proceedings.

[6] On 8 July 2003, the defendant’s solicitors sent the following letter to the plaintiff’s solicitors:

Accordingly, the plaintiff filed its Defence to Counterclaim on 9 July 2003.

[7] On 17 July 2003, the defendant filed an appeal against the Assistant Registrar’s decision of 4 July 2003 (Registrar’s Appeal No. 220 of 2003), the appeal before me. The appeal proceeded on the same preliminary issue of whether the defendant had taken a step in the proceedings, thereby depriving itself of the right to apply for a stay

[8] S 6 (1) Arbitration Act provides:

[9] Paragraph 20.035 of Halsbury’s Laws of Singapore, Volume 2, 2003 Reissue makes the following statements:

[10] In Yeoh Poh San & Anor v Won Siok Wan [2002] 4 SLR 91, after the defendant was served with a writ of summons in Malaysia, she entered an appearance here and applied for an order that the proceedings be stayed or dismissed or discontinued on the ground of multiplicity of proceedings or forum non conveniens. She failed in that application. Woo Bih Li JC held that when a plaintiff’s solicitor was aware that a defendant had filed an appeal against a refusal to order a stay, he should not insist on the filing of the Defence pending the hearing of the appeal. The judge was of the view that this principle applied to an application for a stay on any grounds and was not confined to a challenge based on absence of jurisdiction. He held that to insist on the filing of the Defence would be wrong because it would defeat the very purpose of the appeal. If the plaintiff’s solicitor insisted on the filing of the Defence, the defendant’s solicitor should apply for an extension of time to file the Defence pending the outcome of the appeal and an extension of time should generally be granted so as not to render the appeal nugatory.

[11] On the present facts, the 48-hour notice by the plaintiff’s solicitors was given only after the period for the service of the Defence had lapsed and no application for a stay had been taken out despite what was said at the PTC. The 48-hour notice was therefore entirely justifiable. S 6 (1) Arbitration Act implies that an application for stay should be filed before the time for serving a Defence has lapsed, failing which judgment in default of Defence may be entered by the plaintiff. What the defendant ought to have done was to file its application for a stay immediately and not file such an application and the Defence at the same time. Nevertheless, the defendant did make it clear in its Defence that it was not intending to defend the claim in Court.

[12] The Malaysian High Court case of Ting Ung Tuang v Lau Tiong Ik Construction Sdn Bhd [2001] 6 MLJ 318 does not stand for the proposition that a Defence must be filed in every case. The defendant in the Malaysian case entered conditional appearance (a concept no longer applicable in our Rules of Court) in a suit and allowed such appearance to become unconditional while commencing a fresh action by way of originating summons for a stay under the Arbitration Act. Judgment in default of Defence was therefore entered in the suit. In refusing to set aside the default judgment, the learned judge there held that the dilemma faced by the defendant could have been avoided if an application had been filed to either stay the proceedings or to set aside the same on the ground that the Court did not have jurisdiction in view of the agreement to arbitrate. That way, the judge continued, if the plaintiff took objection to the application, arguments could have been presented to the Court on the true scope, purpose and ambit of a conditional appearance.

[13] The defendant was careful enough to reserve its right to apply for a stay in its Counterclaim by incorporating paragraph 1 of the Defence. A Counterclaim is a separate matter from the plaintiff’s claim [Order 15 rule 2 (3)] although the rules [Order 15 rule 2 (1)] require a Counterclaim, if made, to be added to the Defence. In a Counterclaim, the defendant takes on the mantle of a plaintiff. The defendant here would therefore be evincing an intention to sue on the subject matter covered by the arbitration clause if no reservation to apply for a stay had been stated in its Counterclaim as well.

[14] However, the defendant undermined itself by its action of giving its own 48-hour notice to the plaintiff in respect of its Counterclaim in the period between the Assistant Registrar’s decision and this appeal. That notice put it beyond doubt that it was serious in pursuing its Counterclaim in Court and not by way of arbitration as the Counterclaim pertained to matters covered by the arbitration clause. The 48-hour notice militated against the defendant’s solicitors’ arguments of an ‘unequivocal, clear and consistent’ intention to arbitrate the matters in dispute as the Counterclaim and the Defence were intertwined. The service of the 48-hour notice by the defendant was clearly a step in the proceedings within the meaning of s 6 (1) Arbitration Act and thereby nullified the defendant’s right to apply for a stay.