[1999] SGCA 25

In the Court of Appeal of the Republic of Singapore

[1999] SGCA 25

CA 269/1998

Between

Lian Soon Construction Pte Ltd

… Plaintiff

And

Guan Qian Realty Pte Ltd

… Defendant

grounds of decision

Civil Procedure — Appeals; Civil Procedure — Appeals

This judgment is subject to final editorial corrections approved by the court and/or redaction pursuant to the publisher’s duty in compliance with the law, for publication in LawNet and/or the Singapore Law Reports.

Lian Soon Construction Pte Ltd v Guan Qian Realty Pte Ltd

[1999] SGCA 25

CA 269/1998
Karthigesu JA; L P Thean JA
05 April 1999

1 KARTHIGESU JA

3 The facts

5 The appellants were the main contractors engaged by the respondents for a building project (the erection of a block of ten-storey residential apartments) at Kim Yam Road. The main contract signed between the parties on 18 July 1996 incorporated the Standard Form of Articles and Conditions of Building Contract (Lump Sum) (4th Ed) published by the Singapore Institute of Architects (the `SIA Conditions`).

13 The decision below

15 On the issue of the admission of fresh evidence, Lai Kew Chai J held that a distinction had to be drawn between the admission of fresh evidence by the judge-in-chambers sitting on appeals from the registrar and the Court of Appeal. A lower threshold was imposed for the former, and a judge-in-chambers could admit fresh evidence, even in the absence of special reasons, so long as the materiality of the fresh evidence was important, even though it was not conclusive.

17 The appeal

19 There were two issues in this appeal. Firstly, whether the learned judge had erred in the exercise of his discretion in granting a stay of execution on the summary judgment. Secondly, the principles governing the exercise of a judge`s discretion in determining whether leave should be given for further evidence to be admitted on an appeal against summary judgment from the registrar to the judge-in-chambers, and whether the learned judge had erred in the exercise of his discretion in this instance. A third question also arose. It was whether the learned judge had erred in the exercise of his discretion in ordering costs of the respondents` application which he fixed at $2,000 to be costs in the appeal.

20 Stay of execution pending appeal

22 The rule of thumb is that an appeal does not operate as a stay of execution. Regarding appeals from decisions of the registrar to the judge-in-chambers O 56 r 1(4) provides:

Except so far as the Court may otherwise direct, an appeal under this Rule shall not operate as a stay of proceedings in which the appeal is brought.

An appeal shall not operate as a stay of execution or of proceedings under the decision appealed from unless the court below or the Court of Appeal so orders and no intermediate act or proceeding shall be invalidated except so far as the Court of Appeal may direct.

24 Lee Sian Hee v Oh Keng Soon [1992] 1 SLR 77 at p 78H:

While the court has power to grant a stay, and this is entirely in the discretion of the court, the discretion must be exercised in accordance with well established principles ( Lee Kuan Yew v JB Jeyarenam [1990] SLR 740 [1991] 1 MLJ 83 ). First, as a general proposition, the court does not deprive a successful litigant of the fruits of his litigation, and lock up funds to which prima facie he is entitled, pending an appeal ( The Annot Lyle [1886] 1 PD 114 at p 116). However, when a party is exercising his undoubted right of appeal, the court ought to see that the appeal, if successful, is not nugatory ( Wilson v Church (No 2) [1879] 12 Ch D 454 at pp 458-59). Thus, a stay will be granted if it can be shown by affidavit that, if the damages and costs are paid, there is no reasonable probability of getting them back, if the appeal succeeds ( Atkins v Great Western Rly Co [1886] 2 TLR 400).

... In the affidavit filed, there are no indications of special circumstances other than the alleged likelihood of success in the appeal. ... the likelihood of success is not by itself sufficient, even in the context of an appeal against a summary judgment. The applicant has also contended in the affidavit that he has made an application to adduce further evidence. In our opinion, he appears to have many more steps to take to get his appeal off the ground. If a bald assertion of success is adequate, then a stay would be granted in every case, for every appellant must expect that his appeal will succeed ( Atkins v Great Eastern Rly Co). This is quite contrary to the Supreme Court of Judicature Act, the Rules of the Supreme Court, and to established case law.

27 Was the respondents` appeal against summary judgment devoid of merit?

29 The appellants claimed for certified sums due under the interim certificates issued under the SIA form of contract. At the summary judgment hearing, the respondents contended that they were entitled to set-off liquidated damages against the certified amounts in the interim certificates. For this, the respondents relied on two delay certificates relating to the main building contract and sub- station works issued by the architect on 13 October 1998, three days before the hearing of the summary judgment application on 16 October 1998. In this present appeal, the respondents relied only on the delay certificate issued with respect to the main building contract as the liquidated damages claimed by the respondents therein ($3,270,000) exceeded the sum claimed by the appellants ($2,212,435.63, interest and costs). The liquidated damages claimed in respect of the sub-station works amounted to $209,000.

30 Construction Law in Singapore and Malaysia (2nd Ed, 1996) p 354, regarding the position with respect to set-off:

The SIA80-88 form alters substantially the common law position as regards the right of set-off and counterclaim available to the employer in relation to claims by the contractor for payment under payment certificates. It introduces the concept of `temporary finality` for the architect`s certificates, rulings and decisions. Under this concept, the architect`s certificates and decisions are temporarily binding as between employer and the contractor until such time as a court or arbitrator delivers final judgment or award in any dispute raised in relation thereto. In the meantime, either party may enforce the certificate or ruling as the case may be by summary judgment or interim award. It is noted that the architect`s certificates and decisions are not final and conclusive but may ultimately be set aside or varied by the court or arbitrator.

Accordingly, payment certificates must be honoured by the employer without any set off or counterclaim except for such deductions as are expressly allowed under the Conditions of Contract. There are express provisions allowing the architect to certify or rule that the employer is allowed to deduct costs or damages incurred by him from money due to the contractor. Examples of such provisions are found in cl 1(7) (Certificate of Cost of Other Contractor`s Work) and cl 24(2) (Delay Certificates).Hence, where the SIA conditions applied, the employer must immediately pay the amounts due under the payment certificates notwithstanding any challenges to its validity or correctness, unless deductions are expressly sanctioned by the architect in his certificate, decision or ruling, in accordance with the conditions.

(1) As soon as the latest date for completion of the Works pursuant to cl 22 [Time for Completion] of the Conditions has passed, then if at the said date there are no other matters entitling the Contractor to an extension of time and the Works nevertheless remain incomplete, the Architect shall issue a certificate setting out the Contract Completion Date (if necessary modified or re-calculated under cl 10(1) of these Conditions); the total period of extension of time (if any); the consequential extended Contract Completion Date (if any); and certifying that the Contractor is in default in not having completed the Works by the stated Completion Date or Extended Completion Date (as the case may be). Such certificate shall be issued to the Employer with a copy to the Contractor, and is hereinafter called a `Delay Certificate`.

41 Had the respondents shown no reasonable probability of recovering moneys paid if the appeal was successful?

43 The appellants contended that the learned judge had drawn the wrong inferences from the accounts submitted by the appellants. Counsel for the appellants argued that the 1997 accounts were of no probative value with respect to the appellants` ability to pay in October 1998 and such a burden lay with the respondents. The relevant extract from Lai Kew Chai J`s grounds of judgement read:

7 The [respondents] further relied on the real risk that if the execution on the judgment was not stayed, any successful appeal by them would be rendered nugatory. There was a serious risk that the [appellants] would not be able to repay. They referred to the latest accounts of the [appellants]. I was taken through the [appellants`] accounts for year ended 31 December 1997. The fixed assets of the company were valued at $6m in round figures. The company was worth $3.5m. However, the current assets comprised of trade debtors amounting to $7.2m. In the light of the current recession, it was fair to ask how much of it would be collectible. It was noted that the directors of the [appellants] were owing the company $4.2m. Trade creditors totalled $5.2m. All told, the sum of $19m would be at stake. The company incurred a lost (sic) of $759,347 in 1997. Its landed asset, though booked at $4.85m, could have fallen significantly, which fall would be in line with current trend in property prices.

The amounts owing by the directors are unsecured and interest free, with no fixed terms of repayment.

The bank overdraft and term loan are secured on the company`s leasehold and freehold properties with a total net book value of $4,856,287 as at 31 December 1997 and by the personal guarantees of the directors.

52 Admission of further evidence on appeal against summary judgment from the registrar to a judge in chambers

54 The appellants contended that Lai Kew Chai J erred in failing to apply the higher Ladd v Marshall test in determining whether to allow the admission of the architect`s affidavit. They argued that there had been a hearing on the merits of the summary judgment before the deputy registrar, hence special circumstances had to be shown before the affidavit was admissible before the judge-in-chambers. They relied on the decision in Hua Khian Ceramics Tiles Supplies Pte Ltd v Torie Construction Pte Ltd [1992] 1 SLR 884 . The practice in the UK was to readily allow fresh evidence on appeal to a judge-in-chambers. The appellants argued that the position in the UK should no longer be followed since as of August 1991, the position with respect to the procedure for filing affidavits under O 14 r 2 was amended in Singapore. A strict timetable was now prescribed by the Rules of Court, and there was no such equivalent in UK. The appellants also cited the position in Malaysia, where O 14 r 2 was similar to the UK provision, yet O 56 r 3A incorporated the Ladd v Marshall test where fresh evidence was adduced before a judge-in-chambers.

55 Jacobs v Booth`s Distillery Co [1901] 85 LT 262; Thompson v Marshall [1879] 41 LT 720. Summary judgment is in fact, expedited relief. With the new O 14 r 2, there is now a fixed time-table governing the filing and service of affidavits, and the process had to come to an end within 38 days of the filing of the application for summary judgment, unless the court otherwise gave leave. This new process, by which time started to run from the filing of the application, as opposed to the position under the former rules which geared the time limit backwards from the date of the hearing (`4 clear days before the return day`), ensured that the proceedings were expedited and delays minimised.

56 Supreme Court Practice 1999 at 14/4/45:

The evidence on an appeal to the Judge in Chambers should ordinarily be the same as it was before the Master or District Judge; but since such an appeal is dealt with by way of an actual rehearing of the application which led to the order under appeal, and the Judge treats the matter afresh as though it came before him for the first time, save that the party appealing has the right as well as the obligation to open the appeal, it would seem that the judge in his discretion is free to admit fresh evidence, and he frequently does so in the absence of special reasons (see Evans v Bartlam [1937] AC 473 at 480; Krakauer v Katz [1954] 1 WLR 278[1954] 1 All ER 244, CA)

On the other hand, the Court of Appeal does not have an unfettered discretion to receive further evidence on hearing an appeal against a summary judgment in favour of a plaintiff in proceedings under O 14 or O 86 and it might do so only on `special grounds` as provided by O 59 r 10(2) within the limits laid down, per Denning LJ in Ladd v Marshall ...

57 Singapore Court Practice 1999 , agrees that this distinction should be drawn. The rationale behind the different thresholds employed in allowing evidence before a judge-in-chambers as compared to the Court of Appeal may be understood from an extract from the Supreme Court Practice 1999 , at para 58/1/3:

An appeal from the Master or District Judge to the Judge in Chambers is dealt with by way of an actual rehearing of the application which led to the order under appeal, and the Judge treats the matter as though it came before him for the first time, save that the party appealing, even though the original application was not by him but against him, has the right as well as the obligation to open the appeal. The Judge `will of course give the weight it deserves to the previous decision of the Master; but he is in no way bound by it` (per Lord Atkin in Evans v Bartlam [1937] AC 473 at 478). The Judge in Chambers is in no way fettered by the previous exercise of the Master`s discretion, and on appeal from the Judge in Chambers, the Court of Appeal will treat the substantial discretion as that of the Judge, and not of the Master ( Evans v Bartlam, above; Cooper v Cooper [1936] WN 205; and Cremin v Barjack Properties Ltd [1985] 273 Est Gaz 299, CA).

58 Langdale v Danby [1982] 3 All ER 129[1982] 1 WLR 1123, this rule applies to appeals against summary judgment because such a judgment is concerned with triable issues and is therefore based on the merits of the case.

59 Hua Khian Ceramics does not support the appellants` contention. There had been a hearing of the application for summary judgment before the registrar, then a hearing before GP Selvam JC (as he then was), at which he gave judgment for the plaintiffs. The defendants then applied to make further arguments before the learned judge, and sought to adduce further evidence at that stage. The learned judge regarded this as an abuse of process and accordingly applied the strict Ladd v Marshall principles. In the event, he disallowed the application. Lai Kew Chai J was thus correct in drawing a distinction between the admission of fresh evidence before a judge-in-chambers as opposed to the Court of Appeal.

60 Shunmugam Jayakumar & Anor v Jeyaretnam JB & Anor [1997] 2 SLR 172 , GP Selvam J similarly held that an appeal against a decision of the registrar is different from an appeal to the Court of Appeal. The former is in effect a fresh hearing at which the matter is argued afresh. As a matter of convenience counsel may not present full arguments but that does not detract from the true nature of such appeals. This ruling is supported by what Chan Sek Keong J (as he then was) said in Herbs and Spices Trading Post Pte Ltd v Deo Silver (Pte) Ltd [1990] SLR 1234 at p 1238; [1991] 2 MLJ 311 at p 313: `... an appeal from the registrar of the High Court to the judge-in-chambers is by way of an actual rehearing of the application and the judge treats the matter afresh as though it came before him for the first time.` This view was affirmed by the Court of Appeal in Augustine & Anor v Goh Siam Yong [1992] 1 SLR 767 .

61 Chang Ah Lek & Ors v Lim Ah Koon [1999] 1 SLR 82 , the sums awarded for loss of earnings and loss of earning capacity by the assistant registrar had been varied by a judge-in-chambers. The Court of Appeal held that the judge-in-chambers was perfectly entitled to do so. See [para ] 11 where the court said:

... when a judge in chambers hears an appeal from registrars the judge rehears the application as if he is sitting at first instance although he will accord the appropriate weight to the registrar`s decision but has complete freedom in the exercise of his own discretion. ...

64 Costs of the respondents` application

66 The appellants contended that the learned judge erred in ordering costs of the respondents` application to adduce further evidence to be costs in the appeal. In the circumstances, we believed the learned judge meant to order costs in the application rather than in the appeal.

67 Conclusion

69 It was for all the above reasons that we dismissed this appeal.

Karthigesu JA
L P Thean JA

Christopher Chua and Lee Chau Ee (Drew & Napier) for the appellants
Giam Chin Toon SC and Peter Chow (Wee Swee Teow & Co) for the respondent