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Singapore
By Sushant Shukla 14 min read

DKT v DKU

The court held that an arbitral award should be read generously and that a failure to substantively address a defence in closing submissions justifies an arbitral tribunal dismissing it without detailed analysis. Furthermore, the 'no evidence rule' is not part of Singapore law, a

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Case Details

  • Citation: [2024] SGHC 300
  • Court: General Division of the High Court of the Republic of Singapore
  • Decision Date: 26 November 2024
  • Coram: Kristy Tan JC
  • Case Number: Originating Application No 844 of 2024
  • Hearing Date(s): 30 October, 25 November 2024
  • Claimants / Plaintiffs: DKT (referred to as “T”)
  • Respondent / Defendant: DKU (referred to as “U”)
  • Counsel for Claimants: Tan Tian Luh, Tan Xian Ying and Yap Xuan Wei (Chancery Law Corporation)
  • Counsel for Respondent: Abraham Vergis SC, Zhuo Jiaxiang and Ngo Wei Shing (Providence Law Asia LLC)
  • Practice Areas: Arbitration; Setting aside of arbitral awards; Breach of natural justice

Summary

The decision in [2024] SGHC 300 concerns an application by DKT (“T”) to set aside an arbitral award (the “Award”) issued on 30 May 2024 in favour of DKU (“U”). The application was brought under s 48(1)(a)(vii) of the Arbitration Act 2001 (2020 Rev Ed) (the “Act”), on the primary ground that the arbitral tribunal (the “Tribunal”) breached the rules of natural justice. The underlying dispute arose from two term contracts—the “2012 Term Contract” and the “2014 Term Contract”—under which U engaged T to provide maintenance services, minor works, and repairs. U’s central claim in the arbitration was that T had claimed and been paid for crack repair works that were either not completed or not carried out in accordance with the contractually mandated specifications set out in the Schedule of Rates (“SOR”).

The Tribunal found in favour of U, awarding damages based on the payments U had made to T for the non-compliant or non-existent works. In the High Court, T challenged the Award on three main grounds: first, that the Tribunal decided the case on a basis not pleaded (specifically regarding the requirements for reliance damages); second, that the Tribunal failed to consider T’s pleaded defences of acquiescence, waiver, variation, and estoppel; and third, that the Tribunal made findings of fact without any supporting evidence. Kristy Tan JC dismissed the application in its entirety, reaffirming the high threshold for setting aside awards and the principle of minimal curial intervention.

A significant doctrinal contribution of this judgment is the Court’s categorical rejection of the “no evidence” rule as a ground for setting aside an arbitral award in Singapore. The Court clarified that even if a tribunal makes a finding of fact without evidence, this does not, in itself, constitute a breach of natural justice unless it results from a procedural defect that deprived a party of the opportunity to be heard. Furthermore, the judgment provides critical guidance for practitioners on the necessity of substantively addressing pleaded defences in closing submissions; a failure to do so may lead a tribunal to reasonably conclude that such defences have been abandoned or are unsubstantiated, without breaching natural justice.

The Court also addressed the treatment of late-arriving legal authorities, specifically the requirements for reliance damages set out in the Appellate Division decision of Liu Shu Ming and another v Koh Chew Chee and another matter [2023] 1 SLR 1477. The Court held that where a party itself introduces a legal authority and the other party is given an opportunity to respond, there is no breach of natural justice, even if the specific legal requirements found in that authority were not explicitly pleaded at the outset of the arbitration.

Timeline of Events

  1. 24 May 2012: U engages T under the “2012 Term Contract” for maintenance and repair services.
  2. 1 February 2014: U engages T under the “2014 Term Contract” for maintenance and repair services.
  3. 2018: U commences two sets of arbitral proceedings against T pursuant to the arbitration agreements in the Term Contracts; these are subsequently consolidated into the Arbitration.
  4. 11 February 2022: Procedural milestones in the arbitration continue (referenced in regex dates).
  5. 13 May 2022: T files its Statement of Defence (Amendment No 2), pleading defences of acquiescence, waiver, variation, and estoppel.
  6. 17 June 2022: Mr K, U’s expert witness in concrete repair, issues his main report (the “K Main Report”).
  7. 18 July 2022: Further evidentiary and procedural steps are taken in the arbitration.
  8. 17 February 2023: Commencement of the substantive hearing phase or submission cycle (referenced in regex dates).
  9. 28 April 2023 – 13 June 2023: Period of intensive submissions and hearings, including the filing of closing and reply submissions.
  10. 30 May 2024: The Tribunal issues the Final Award in favour of U.
  11. 23 August 2024: T files Originating Application No 844 of 2024 to set aside the Award.
  12. 30 October 2024: First hearing date for OA 844 before Kristy Tan JC.
  13. 25 November 2024: Final hearing date for OA 844.
  14. 26 November 2024: Kristy Tan JC delivers the judgment dismissing the application.

What Were the Facts of This Case?

The dispute arose from a long-standing commercial relationship in the property and facilities management sector. U, the respondent in the High Court and claimant in the arbitration, had engaged T, the applicant, under two successive term contracts: the 2012 Term Contract and the 2014 Term Contract. Under these agreements, T was responsible for providing maintenance services, minor works, and repairs for U’s buildings. A critical component of these services involved the inspection and repair of cracks in walls and ceilings.

The Term Contracts incorporated a Schedule of Rates (“SOR”) which mandated specific technical methods for crack repairs. These methods included “injection” (using epoxy or polyurethane), “V-shaped groove cuts,” and the use of surface ports. U’s case was built on the allegation that T had systematically failed to perform these works according to the SOR specifications, or in some instances, failed to perform the works at all, despite submitting claim forms and receiving payment for them. U sought to recover these payments as damages for breach of contract.

In the arbitration, U relied heavily on the expert evidence of Mr K, a specialist in concrete repair. Mr K conducted an extensive investigation across a significant number of buildings. His methodology involved checking areas identified in T’s claim forms, performing “scraping” of repaired strips, and taking “core samples” to determine if the internal repair work matched the claimed method. Mr K’s findings were stark: he concluded that in many areas, there was no surface preparation underneath the purported repaired strips, no signs of injection holes or V-shaped grooves, and that many core samples simply fell apart because no relevant repair materials were detected. In a significant proportion of inspected buildings, cracks were not even observed when the surface strips were removed.

T’s primary defence was that it had satisfactorily performed the works. However, T also raised several alternative legal defences in its Statement of Defence (Amendment No 2) dated 13 May 2022. These included:

  • Acquiescence: That U had acquiesced to any non-compliance with the SOR specifications.
  • Waiver: That U had waived the requirement for strict compliance with the SOR.
  • Variation: That the parties had agreed to a variation of the contracts by U’s acceptance of non-compliant works.
  • Estoppel: That U was estopped from insisting on the SOR specifications.

These defences were based on the premise that U’s representatives had inspected and signed off on the works at the material time.

The arbitration process was complex, involving consolidated proceedings and multiple rounds of submissions. During the closing stages of the arbitration, a legal issue arose regarding the nature of the damages U was seeking. U had framed its claim as a recovery of the sums paid to T—essentially a claim for reliance loss or “wasted expenditure.” T argued that U was not entitled to such damages unless it met the strict requirements set out in the then-recent Appellate Division decision in Liu Shu Ming and another v Koh Chew Chee and another matter [2023] 1 SLR 1477 (the “Liu Requirements”). These requirements generally stipulate that reliance damages are available only if proving expectation loss is impossible or extremely difficult, or if the contract was not for profit.

The Tribunal eventually issued the Award on 30 May 2024, finding that T had breached the Term Contracts and awarding U damages. The Tribunal’s reasoning on the crack repairs was based on its acceptance of Mr K’s evidence and its finding that T’s defences of waiver, estoppel, and acquiescence were not substantively supported in T’s closing submissions. T subsequently applied to the High Court to set aside this Award.

The application to set aside the Award was grounded in s 48(1)(a)(vii) of the Arbitration Act 2001, which requires the applicant to establish a breach of the rules of natural justice. The High Court identified three primary issues for determination, corresponding to the three grounds raised by T:

Issue 1: The Liu Requirements (Ground 1)
Whether the Tribunal breached natural justice by deciding that U had satisfied the “Liu Requirements” for reliance damages. T contended that this was a “new case” not pleaded by U and that the Tribunal had effectively “stepped into the arena” to assist U in meeting a legal burden it had not initially addressed. This issue engaged the doctrine of the “scope of the submission to arbitration.”

Issue 2: Failure to Consider Defences (Ground 2)
Whether the Tribunal breached natural justice by failing to consider T’s pleaded defences of acquiescence, waiver, variation, and estoppel. T argued that the Tribunal had summarily dismissed these defences in a single paragraph of the Award without engaging with the evidence or arguments T had presented during the hearing. This issue required the Court to determine the extent of a tribunal’s duty to address every point raised by a party.

Issue 3: The “No Evidence” Rule (Ground 3)
Whether the Tribunal breached natural justice by making findings of fact regarding the crack repairs that were allegedly unsupported by any evidence. T specifically challenged the Tribunal’s reliance on Mr K’s expert report, arguing that the evidence was so flawed that the findings amounted to a “perverse” exercise of power. This issue required the Court to clarify whether the “no evidence” rule exists as a ground for setting aside an award in Singapore law.

How Did the Court Analyse the Issues?

The Court began its analysis by emphasizing the policy of minimal curial intervention and the high threshold for setting aside an award for breach of natural justice. Citing Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3 SLR(R) 86 at [29], the Court noted that an applicant must establish the specific rule of natural justice breached, how it was breached, the connection to the award, and the resulting prejudice.

Analysis of Ground 1: The Liu Requirements
T’s argument was that the Tribunal had allowed U to succeed on a basis (the Liu Requirements) that was never pleaded. The Court rejected this, finding that the issue of the availability of reliance damages was squarely within the scope of the reference. The Court observed that it was actually T who had first introduced the Liu Shu Ming case in its closing submissions to argue that U’s claim must fail. As the Court of Appeal explained in CKH v CKG and another matter [2022] 2 SLR 1, matters can arise during an arbitration that become part of the issues even if not in the initial pleadings.

The Court further found that the Tribunal had acted fairly by granting U leave to file supplementary reply submissions to address the Liu Shu Ming point after T had raised it. This ensured that both parties had a fair opportunity to be heard on the legal requirements for reliance damages. The Court held:

“T’s complaint was essentially that the Tribunal’s decision on the Liu Requirements was wrong. This was a challenge on the merits, which is not a ground for setting aside.” (at [48])

Analysis of Ground 2: Failure to Consider Defences
T complained that the Tribunal failed to consider its defences of acquiescence, waiver, variation, and estoppel. The Tribunal had dealt with these at [350] of the Award, stating that T had not substantively addressed them in its closing submissions. The Court conducted a detailed review of T’s closing and reply submissions in the arbitration and agreed with the Tribunal’s assessment. While T had mentioned the facts underlying these defences, it had failed to explain how the legal elements of waiver or estoppel were satisfied.

The Court held that a tribunal is not required to engage in a “hypercritical or excessively syntactical analysis” of an award (citing Soh Beng Tee at [65(f)]). If a party fails to substantively address a pleaded defence in its closing submissions, it is reasonable for a tribunal to conclude the defence is not being meaningfully pursued. The Court distinguished Front Row Investment Holdings (Singapore) Pte Ltd v Daimler South East Asia Pte Ltd [2010] SGHC 80, noting that in Front Row, the tribunal had completely missed a central, substantively argued point, whereas here, T had simply failed to make the argument.

Analysis of Ground 3: The “No Evidence” Rule
This was the most doctrinally significant part of the judgment. T argued that the Tribunal’s findings on crack repairs were made without evidence because Mr K’s report was allegedly unreliable. The Court categorically held that the “no evidence” rule is not part of Singapore law for setting aside arbitral awards. Kristy Tan JC cited DHZ v DHY and another matter [2024] SGHC 236 and AYW v AYX [2016] 1 SLR 1183, which established that a complaint about the lack of evidence is a complaint about the quality of the evidence or the correctness of the finding, both of which go to the merits.

The Court explained that for a “no evidence” claim to succeed as a natural justice breach, it would have to be shown that the tribunal based its decision on a finding that was never in issue, such that the parties had no opportunity to address it. That was not the case here. The crack repairs were the central issue, and there was voluminous evidence, including Mr K’s report and T’s own claim forms. The Court noted:

“The ‘no evidence’ rule is not a ground for setting aside an arbitral award in Singapore. Even if it were, T’s complaint would fail because there was clearly evidence before the Tribunal.” (at [61])

The Court also rejected T’s reliance on Stephen J Fisher v Sunho Construction Pte Ltd [2018] SGHC 76, clarifying that Fisher did not endorse the “no evidence” rule but rather dealt with a situation where a tribunal made a finding on a point that was not even in dispute.

What Was the Outcome?

The High Court dismissed T’s application to set aside the Award in its entirety. The Court found no breach of natural justice under s 48(1)(a)(vii) of the Arbitration Act 2001. The operative conclusion of the Court was stated as follows:

“In conclusion, I dismissed OA 844.” (at [76])

Regarding costs, the Court ordered T to pay U costs on an indemnity basis. This was based on the Indemnity Clause found in both the 2012 and 2014 Term Contracts, which provided that T would indemnify U against all costs and expenses (including legal costs) arising from any breach of the contract by T. The Court applied the principle from Telemedia Pacific Group Ltd v Credit Agricole (Suisse) SA [2015] 4 SLR 1019 and NSL Oilchem Waste Management Pte Ltd v Prosper Marine Pte Ltd [2020] SGHC 204, holding that where a contract provides for an indemnity for legal costs, the court will generally give effect to it by awarding costs on an indemnity basis unless there is a good reason not to.

The Court fixed the quantum of costs at $55,000 all-in. This amount was determined after considering the complexity of the 50-page judgment, the length of the underlying arbitration record, and the fact that the hearing spanned two separate days. The Court found this quantum to be reasonable and proportionate in the circumstances of a hard-fought setting-aside application.

Why Does This Case Matter?

DKT v DKU is a significant decision for arbitration practitioners in Singapore for several reasons. First, it provides a definitive statement on the non-existence of the “no evidence” rule in the context of setting aside arbitral awards. While some older authorities or foreign jurisdictions might suggest that a finding made without any evidentiary basis could constitute a jurisdictional error or a breach of natural justice, the High Court has now clarified that in Singapore, such a complaint is almost always an impermissible challenge to the merits of the award. This reinforces the finality of arbitral awards and protects the tribunal’s role as the sole master of the facts.

Second, the judgment serves as a stern warning to counsel regarding the importance of closing submissions. The Court’s finding that the Tribunal did not breach natural justice by dismissing defences that were not “substantively addressed” in closings—even though they were pleaded—highlights a critical procedural risk. Practitioners cannot rely on their pleadings to carry the day if they do not follow through with a structured legal and evidentiary argument at the end of the hearing. The Court’s endorsement of a “generous reading” of awards means that tribunals are not expected to hunt through the record to find arguments that counsel failed to articulate clearly.

Third, the case clarifies the boundaries of the “scope of reference.” It demonstrates that the scope of an arbitration is dynamic and can be expanded by the way the parties conduct their case and the legal authorities they introduce. T’s attempt to use the Liu Shu Ming requirements as a “shield” backfired when the Tribunal used them as a “sword” to assess U’s damages, and the Court held this was entirely permissible because T had put those requirements in issue. This underscores the need for strategic caution when introducing new legal tests late in the proceedings.

Finally, the decision on costs reinforces the power of contractual indemnity clauses. Parties who unsuccessfully challenge arbitral awards in the face of such clauses should expect to pay costs on an indemnity basis. This adds a significant financial layer to the already high bar for setting-aside applications, further deterring unmeritorious challenges to arbitral finality.

Practice Pointers

  • Closing Submissions are Critical: Ensure that every pleaded claim or defence is substantively addressed in closing submissions. Do not assume the tribunal will refer back to the pleadings or the opening statement to fill in gaps in the final argument.
  • Avoid the “No Evidence” Trap: When advising clients on setting aside an award, distinguish between a total lack of evidence on a non-disputed point (which might be a breach) and a tribunal’s acceptance of “weak” or “flawed” evidence (which is a merits issue and not a ground for setting aside).
  • Manage New Authorities Carefully: If a significant case like Liu Shu Ming is decided during the arbitration, proactively address its impact. If the other side raises it, immediately request the opportunity to file supplementary submissions to ensure the right to be heard is preserved.
  • Indemnity Costs Risk: Before filing a setting-aside application, check the underlying contract for indemnity clauses. Warn clients that a loss could result in indemnity costs, which are significantly higher than standard party-and-party costs.
  • Read Awards Generously: When reviewing an award for potential challenges, do not focus on “excessively syntactical” errors. The court will look at the substance of whether the tribunal engaged with the core of the dispute.
  • Expert Evidence Challenges: Challenges to an expert’s methodology or the weight given to their report are almost always merits-based. Unless the expert was not cross-examined or the report was not part of the record, these are unlikely to support a natural justice claim.

Subsequent Treatment

As this is a recent 2024 decision, its subsequent treatment in later cases is not yet fully recorded in the extracted metadata. However, it stands as a robust application of the Soh Beng Tee principles and reinforces the recent trend in the Singapore High Court (seen in cases like DHZ v DHY) to strictly limit the grounds for natural justice challenges and reject the “no evidence” rule.

Legislation Referenced

Cases Cited

Source Documents

Written by Sushant Shukla
Topics
Singapore SLW Case Law Singapore High Court Arbitration 2024 cases
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