[1999] SGCA 3

In the Court of Appeal of the Republic of Singapore

[1999] SGCA 3

CA 92/1998

Between

JDC Corporation
Another

… Appellant

And

Lightweight Concrete Pte Ltd

… Respondent

grounds of decision

Arbitration — Agreement; Civil Procedure — Stay of proceedings; Contract — Contractual terms

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.

JDC Corporation and Another v Lightweight Concrete Pte Ltd

[1999] SGCA 3

CA 92/1998
Karthigesu JA; L P Thean JA
12 January 1999

1 LP THEAN JA

3 The facts

5 The appellants were the main contractors for the construction of an administration and operation building for the new container terminal at Pasir Panjang (`the project`) of the Port of Singapore Authority (`PSA`). The respondents were the nominated sub-contractors for the supply and installation of external wall cladding and glazing for the project under a contract (`the sub-contract`) entered into by the parties on or about 17 May 1996.

8 (b). a sum of $1,962,100 representing additional preliminaries and staff overheads.

12 Contractor`s right to deduction or set-off

The Contractor shall notwithstanding anything in this Sub-contract contained be entitled to deduct from or set off against any money due from him to the Sub-Contractor (including any retention money) any sum or sums which the Sub-Contractor is liable to pay to the Contractor under this Sub-Contract.

14 Appeal

16 The sole issue before us was whether the appellants were entitled to stay the proceedings pursuant to s 7 of the Act. The sub-contract by cl 30 of the condition provided for arbitration of any dispute between the parties. It is useful here to set out, in so far as material, the provisions of this clause which are as follows:

30 Arbitration

Provided always that in case of any dispute or difference except a dispute or difference as to rates of wages or conditions of employment of workmen employed by the Sub-Contractor in and for the purpose of this Contract including workmen employed by the authorised Sub-Contractors engaged directly by the Sub-Contractor shall arise between the Sub-Contractor, either during the progress or after completion of the Works or after the determination, abandonment or breach of this Sub-Contract as to the construction of this Sub-Contract, or as to any matter or thing arising thereunder, or as to the withholding by the Contractor of any certificate to which the Sub-Contractor may claim to be entitled, then either party shall give to the other notices in writing of such dispute or differences and such dispute or differences shall be referred to the arbitration and final decision of a person nominated and appointed by agreement between the Contractor and Sub-Contractor or, in event of his death or unwillingness or inability to act, or, if the Contractor or Sub-Contractor fail to agree, of an arbitrator nominated by the Superintending Officer, and the award of such arbitrator shall be final and binding on the parties. Such reference, except on the question of certificates, shall not be commenced until after the completion or alleged completion of the works, unless with the written consent of the Superintending Officer or the Contractor and in any case of the Sub-Contractor:-

...

(1) If any party to an arbitration agreement, or any person claiming through or under him, commences any legal proceedings against any other party to the arbitration agreement, or any person claiming through or under him, in respect of any matter agreed to be referred, any party to the legal proceedings may at any time after appearance, and before delivering any pleadings or taking any other steps in the proceedings, apply to the court to stay the proceedings. (2) The court or a judge thereof, if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement, and that the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, may make an order staying the proceedings.

18 ... this is not a case in which the right to set off is in dispute. Rather, the facts of the case are such that the defendants` right to set off is without any legal justification. The basis of the defendants` set off is set out in their letter of 29 December 1997 and is a claim for actual and potential losses arising from alleged delay by the plaintiff. In this letter, they laid out claims including acceleration costs, addition preliminaries and staff overheads as well as reserved the right to pass on any claim for liquidated and ascertained damages. 19 However, under the terms of the Sub-Contract, the parties have committed themselves to liquidated damages as being the remedy for delay ... 20 Further, in the form of warranty to be given by the nominated sub-contractor, the contract provisions provided ` for payment of liquidated damages for delay in completion at the rate of Singapore Dollars Two Thousand (S$2,000) per day `. 21 The defendants` set-off under cl 12 is not a claim for liquidated damages for delay but a claim for actual losses. However, there is already a clause in the sub-contract agreeing that a fixed sum of $2,000 per day be paid as damages for delay in completion.

21 Temloc v Errill Properties [1987] 39 BLR 30 and continued at [para ] 22:

Here, the parties have agreed that $2,000 per day is what is recoverable in the event of delay on the part of the sub-contractor. This should be the amount which the defendants are allowed to set-off against the payments demanded by the plaintiff under Interim Certificates 19 and 20. However, they are claiming actual damages as well as preserving their right to liquidated damages. This is inconsistent with the sub-contract. The defendants have no right to set off their actual losses from the sums due and payable to the plaintiff under the interim certificates.

5 Liquidated and ascertained damages 5.1 It is to be clearly and definitely understood by the Nominated Sub-contractor that time is the essence of this contract and that the periods specified for the completion of the works must be strictly adhered to. Failure to complete the work within the periods specified will render the Nominated Sub-contractor liable to pay to the main contractor liquidated and ascertained damages at the rate which the Authority will otherwise impose on the main contractor under the main contract for the various phases. For the convenience of the nominated sub-contractor, an extract from the main contract providing such rates has been enclosed in this tender document and can be found on p PS/25 in the section on the `Preliminaries and Conditions of the Sub-Contract`.

31(a) Liquidated and ascertained damages Singapore Dollars Two Thousand (S$2,000.00) per day

19 Completion of the sub-contract works The sub-contractor within seven (7) days of the receipt by him of a written notice from the contractor so to do shall with all reasonable dispatch proceed to execute and complete the Sub-Contract works or the respective sections thereof within the period or periods as specified in the Articles of Agreement for Sub-Contract. Provided that the Sub-Contractor shall pay to the Contractor any damage or loss suffered or incurred by the Contractor and caused by or due to the failure of the Sub-Contractor to complete within the said period or respective periods of which damage or loss as aforesaid the Contractor shall at the earliest opportunity give reasonable notice to the Sub-Contractor that the same is being or has been suffered or incurred; but so nevertheless that if such failure to complete as aforesaid: (a) shall be caused by or due to any of the matters specified in cl 10(a) or (b) hereof or by any act or omission of the Contractor, his Sub-Contractors or their respective servants or agents; or (b) shall be within any of the cases in which the Contractor could obtain an extension of the period or periods for completion under the Main Contract; then the Contractor shall grant a fair and reasonable extension of the said period or periods for completion of the Sub-Contract works or the respective sections thereof (as the case may require) and such extended period or periods shall be the period or periods for completion of the same respectively and this clause shall be read and construed accordingly.

27 Kwan Im Tong Chinese Temple & Anor v Fong Choon Hung Construction Pte Ltd [1998] 2 SLR 137 .

On or about 26 January 1998, the defendants set-off the sum of $86,520 due and payable to the plaintiff under interim Certificate No 20.

31 Hayter v Nelson [1990] 2 Lloyd`s Rep 265 at p 268:

[I]t must not be forgotten that by their arbitration clause the parties have made an agreement that in place of the courts, their disputes should be resolved by a private tribunal. Even assuming that this tribunal is likely to be slower or otherwise less efficient than the courts, that bargain remains - and I know of no general principle of English law to suggest that because a bargain afterwards appears to provide a less satisfactory outcome to one party than would have been the case had it not been made or had it been made differently, that bargain can be simply put on one side and ignored.

Karthigesu JA
L P Thean JA

Christopher Chuah and Michael Chia (Drew & Napier) for the appellants
David Morris and Lean Min Tze (Arthur Loke & Partners) for the respondents