Case Details
- Citation: [2000] SGCA 14
- Case Number: CA 85/1999
- Decision Date: 21 March 2000
- Court: Court of Appeal of the Republic of Singapore
- Coram: Chao Hick Tin JA; Tan Lee Meng J; L P Thean JA
- Judges: Chao Hick Tin JA, Tan Lee Meng J, L P Thean JA
- Plaintiff/Applicant: Hong Huat Development Co (Pte) Ltd
- Defendant/Respondent: Hiap Hong & Co Pte Ltd
- Legal Areas: Arbitration — Award; Contract — Contractual terms; Words and Phrases — “Substantially affect the rights”
- Statutes Referenced: Arbitration Act (Cap 10, 1985 Ed); Arbitration Act (Cap 10); Interpretation Act (Cap 1); Rules of Court (1997 Rev Ed) (O 69 rr 2(2) & 4(2))
- Key Procedural Provisions: Arbitration Act ss 28(2), 28(3), 28(7); O 69 rr 2(2) & 4(2) Rules of Court (1997 Rev Ed)
- Counsel (Appellants): Lawrence Teh (Rodyk & Davidson)
- Counsel (Respondents): John Chung and Sharon Tay (Donaldson & Burkinshaw)
- Judgment Length: 14 pages, 8,770 words
- Arbitration Context: Leave to appeal against an arbitration award; extension of time; alleged arbitrator misconduct; delayed delivery of award
- Contractual Context: Building contract incorporating 1979 Singapore Institute of Architects Standard Conditions of Building Contracts (SIA Conditions), including cl 30 and cl 34
- Principal Substantive Dispute: Whether employers could be liable for the architect’s late certification and related damages/interest
Summary
Hong Huat Development Co (Pte) Ltd v Hiap Hong & Co Pte Ltd concerned a challenge to an arbitration award arising from a building dispute under a contract incorporating the 1979 Singapore Institute of Architects Standard Conditions of Building Contracts. The Court of Appeal had to address two linked matters: first, whether the appellants could obtain leave to appeal against the award out of time under s 28 of the Arbitration Act; and second, whether the award should be set aside for alleged misconduct by the arbitrator, particularly in light of the prolonged delay in delivering the award and alleged deficiencies in the award’s reasoning.
The Court of Appeal rejected the appellants’ attempt to extend time for seeking leave to appeal and upheld the High Court’s refusal to set aside the award. In doing so, the court clarified the operation of the statutory leave regime under s 28, including the point from which time begins to run after an award has been “made and published to the parties”, and the approach to be taken when considering extension of time. On the substantive contract issue, the court also affirmed the legal basis for implying an employer’s duty to ensure the proper discharge by the architect of certification functions, and it treated the arbitrator’s reasoning as falling within the permissible bounds of arbitral determination rather than amounting to misconduct.
What Were the Facts of This Case?
The appellants, Hong Huat Development Co (Pte) Ltd, were the owners of a six-storey shopping centre development along Upper Serangoon Road. The respondents, Hiap Hong & Co Pte Ltd, were the main contractors. Building works commenced in 1979 pursuant to a written agreement dated 27 January 1979 at a contract price of $10,243,091.26. The contract incorporated, among other provisions, the 1979 Singapore Institute of Architects Standard Conditions of Building Contracts (“the SIA Conditions”). Clause 34 provided for disputes to be referred to arbitration, with the arbitrator being an architect nominated by the Singapore Institute of Architects.
During the project, disputes arose between the parties concerning, inter alia, the proper amounts recoverable under the final certificate; the delayed issuance and honouring of interim certificates under cl 30(1); excessive deductions of retention sums under cl 30(2); late release of retention sums upon practical completion and the expiration of the defects liability period under cl 30(4)(b) and (c); and the late release of the final certificate under cl 30(6). These disputes were referred to an arbitrator, Raymond Kuah, who accepted his appointment on 4 October 1986. The hearing concluded on 18 March 1988.
Despite several requests from the respondents for an indication of when the award would be published, nothing further was heard. Approximately two years later, on 15 June 1990, the arbitrator requested that a quantity surveyor be appointed to assist with valuation aspects. The parties agreed on 29 June 1990 and the quantity surveyor was appointed. On 30 August 1993, the arbitrator informed the parties that he had received the final accounts from the quantity surveyor and would be able to publish the award by early October 1993. However, there was again a long period of silence.
Eventually, on 24 December 1998, the arbitrator wrote to the parties stating that he had made the arbitration award and that it would be released or delivered to either party upon payment of the balance of his fees amounting to $47,516. The appellants received this letter only on 29 December 1998. After discussions between the parties about sharing the arbitrator’s fees, no agreement was reached. On 8 March 1999, the respondents paid the fees themselves, obtained the award, and forwarded a copy to the appellants’ solicitors on the same day.
The award was largely in favour of the respondents, granting substantially all reliefs sought, subject to a substantial reduction on the claim under the final certificate. The appellants did not dispute the award relating to the final certificate and paid the adjudicated sum of $351,642.06. One of the other sums awarded was $397,788.78, representing losses suffered by the respondents due to the late issue by the architect of interim certificates and the late honouring by the appellants of those interim certificates. The arbitrator reasoned that, where an architect’s engagement involves a standard form building contract with a procedure for issuing certificates, an implied term exists between employer and architect requiring the architect to exercise certification functions according to the contract and to enable the contractor to carry out the works. The arbitrator further held that where the contract gives the architect power to certify matters such as interim payments, the architect must act neutrally, fairly, and impartially between employer and contractor.
Three further sums were awarded on related grounds: $1,799.70 for damages arising from interim certificates allowing greater retention deductions than permitted under cl 30(3); $26,351.40 for damages due to failure to issue certificates for specified moieties of retained sums under cl 30(4)(b) and (c); and $176,210.50 for damages due to failure to issue the final certificate before the expiration of three months from the end of the defects liability period. Interest at 8% per annum was ordered on the sums awarded from the commencement of arbitration to the date of payment.
Dissatisfied, the appellants filed a notice of originating motion on 9 April 1999 seeking leave to appeal against the award under s 28(2) of the Arbitration Act. They raised questions of law including whether a term could be implied obliging the employers to ensure the proper discharge by the architect of certification duties under the SIA Conditions; whether the employers were therefore in breach and liable for losses caused by late certification; and whether, if liable, they were also liable for interest from the commencement of arbitration to payment. The appellants also sought, as an alternative remedy, to set aside the award on the ground of misconduct by the arbitrator, contending that the inordinate delay in delivering the award showed incompetence and caused serious prejudice.
What Were the Key Legal Issues?
The appeal raised multiple legal issues under the Arbitration Act and the Rules of Court. The first was procedural and concerned the time limit for applying for leave to appeal under s 28(3) of the Arbitration Act. Closely connected to this was the second issue: from which event the time should run—specifically, whether time began when the award was “made and published to the parties” and how “publication” should be understood in the context of the arbitrator’s delayed delivery and conditional release of the award upon payment of fees.
The third issue concerned the High Court’s exercise of discretion in refusing an extension of time. The appellants argued that the judge erred in dismissing the motion, implicitly refusing leave to appeal. This required the Court of Appeal to consider the principles governing extensions of time in the arbitration leave context, including the length of delay, reasons for delay, prospects of success, and the degree of prejudice to the respondents.
The fourth issue was substantive and procedural: whether the award should nevertheless be set aside for arbitrator misconduct. The appellants relied on the prolonged delay in delivering the award and alleged deficiencies in the award and its reasoning, contending that these amounted to misconduct warranting the court’s intervention.
How Did the Court Analyse the Issues?
The Court of Appeal began by addressing a preliminary objection raised by the respondents. The respondents contended that, pursuant to s 28(7) of the Arbitration Act, leave must be obtained before an appeal may be brought to the Court of Appeal from a decision of the High Court on an appeal under s 28. The Court of Appeal held that the contention was misconceived because s 28(7) applies to a decision on an appeal, not to an application for leave to appeal. The court therefore treated the procedural route as not barred by the respondents’ reading of s 28(7). This clarification mattered because it ensured that the appellants’ challenge was properly heard on its merits rather than dismissed on a technical jurisdictional ground.
On the time limit question, the court focused on the statutory language in s 28(2) and s 28(3), read with the Rules of Court provisions governing the mechanics of applying for leave. The judgment emphasised that the leave regime is tightly structured and that the court must identify the point at which the time begins to run. In particular, the court considered the phrase “after an award has been made and published to the parties” and the corresponding procedural rule in O 69 r 4(2). The court’s approach reflects a policy of finality in arbitration while still providing a fair opportunity for parties to seek curial supervision within the prescribed time.
Applying those principles to the facts, the court examined the arbitrator’s conduct and the circumstances surrounding the award’s release. The arbitrator had made the award in December 1998 but conditioned delivery upon payment of outstanding fees. The appellants received the letter on 29 December 1998 but did not obtain a copy of the award until 8 March 1999, when the respondents paid the fees and forwarded the award to the appellants’ solicitors. The appellants filed for leave on 9 April 1999. The Court of Appeal considered whether the statutory time should run from the date the award was made and “published” (which the appellants argued should be earlier), or from the date when the award was actually delivered and made available to them (which the respondents effectively supported by resisting any extension).
The Court of Appeal upheld the High Court’s refusal to extend time. In doing so, it applied the factors articulated in Chen Chien Wen Edwin v Pearson [1991] SLR 212, which the High Court had used: the length of delay, the reasons for delay, the chances of success if leave were granted, and the degree of prejudice to the respondents if time were extended. The Court of Appeal agreed that the delay was too long and that the appellants had not provided sufficiently compelling reasons to justify the extension. The court also treated the prejudice factor as relevant even if it was not the dominant consideration, because arbitration is intended to produce timely finality and to avoid prolonged uncertainty for the successful party.
Crucially, the court also assessed prospects of success. It was not persuaded that the appellants had a strong prima facie case on the legal questions they sought to raise. On the implied term issue, the Court of Appeal accepted that the arbitrator’s reasoning was grounded in the structure of the SIA Conditions and the practical allocation of responsibilities in building contracts. The arbitrator had found an implied term between employer and architect requiring the architect to exercise certification functions according to the contract and to act fairly and impartially where the architect has power to certify matters affecting payment and retention. The Court of Appeal treated this as a defensible legal conclusion rather than an error of law that would justify granting leave.
On the misconduct ground, the Court of Appeal considered whether the arbitrator’s prolonged delay and the alleged deficiencies in the award amounted to “misconduct” in the relevant legal sense. The court’s analysis reflected the high threshold for setting aside an arbitration award on misconduct. Delay in delivering an award, while undesirable, does not automatically equate to misconduct warranting curial intervention unless it can be shown to have crossed the legal threshold—such as demonstrating a lack of competence, a failure to conduct the proceedings properly, or a breach of the arbitrator’s duties in a way that undermines the fairness of the process. The Court of Appeal concluded that, on the facts, the appellants had not established misconduct that would justify setting aside the award.
In addition, the court examined the relationship between the arbitrator’s reasoning and the contract framework. The sums awarded were linked to the architect’s certification failures and the knock-on effects on interim payments and retention. The Court of Appeal did not accept that the arbitrator’s approach to liability and interest reflected a fundamental departure from the contract or a failure to address the issues. Rather, it viewed the arbitrator’s reasoning as within the range of permissible arbitral determinations, even if the delay in producing the award was significant.
What Was the Outcome?
The Court of Appeal dismissed the appeal and affirmed the High Court’s decision refusing to grant an extension of time for the appellants to file their application for leave to appeal under s 28(2) of the Arbitration Act. As a result, the appellants were not granted leave to appeal against the arbitration award.
The Court of Appeal also upheld the refusal to set aside the award on the ground of arbitrator misconduct. Practically, the respondents retained the benefit of the award, including the damages awarded for certification-related losses and the interest ordered from the commencement of arbitration to payment.
Why Does This Case Matter?
This decision is significant for arbitration practitioners because it reinforces the strictness of the statutory leave-to-appeal regime under the Arbitration Act. Parties seeking curial supervision must act within the prescribed time limits, and extensions of time will not be granted as a matter of course. The case illustrates that courts will weigh not only the length of delay and reasons, but also prospects of success and prejudice to the opposing party, consistent with the framework in Chen Chien Wen Edwin v Pearson.
Hong Huat also provides useful guidance on the meaning of “publication” of an award for purposes of calculating time. Where an arbitrator delays delivery or conditions release on payment of fees, parties may be uncertain about when the award is treated as “made and published”. The Court of Appeal’s approach underscores that parties should not assume that the time will always run from the date they actually receive a copy; instead, they must be alert to the statutory scheme and take timely steps to protect their rights.
On the substantive contract side, the case is a reminder of how courts may treat implied duties in building contracts incorporating standard form SIA Conditions. The arbitrator’s reasoning—endorsed in substance by the Court of Appeal—supports the proposition that employers may bear responsibility for the architect’s certification failures where the contractual framework and the implied allocation of duties justify such liability. This has practical implications for drafting, risk allocation, and claims strategy in construction disputes involving certification processes.
Legislation Referenced
- Arbitration Act (Cap 10, 1985 Ed)
- Arbitration Act (Cap 10)
- Interpretation Act (Cap 1)
- Rules of Court (1997 Rev Ed), O 69 rr 2(2) and 4(2)
Cases Cited
- [1991] SLR 212 (Chen Chien Wen Edwin v Pearson)
- [2000] SGCA 14 (Hong Huat Development Co (Pte) Ltd v Hiap Hong & Co Pte Ltd)
Source Documents
This article analyses [2000] SGCA 14 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.