Case Details
- Citation: [2021] SGCA 77
- Title: Richard Cheung Teck Cheong Richard & 8 Ors v LVND Investments Pte. Ltd.
- Court: Court of Appeal of the Republic of Singapore
- Date of Decision: 10 August 2021
- Civil Appeal No: 204 of 2020
- Related Proceedings: Suit No 204 of 2020; Registrar’s Appeal No 112 of 2020
- Judges: Sundaresh Menon CJ, Judith Prakash JCA and Steven Chong JCA
- Appellants (Plaintiffs below): Richard Cheung Teck Cheong & 8 Ors (13 appellants in total after consent order)
- Respondent (Defendant below): LVND Investments Pte. Ltd.
- Parties’ Roles: Purchasers (Appellants) vs Developer (Respondent)
- Legal Area: Arbitration; stay of proceedings; arbitration agreement formation; statutory interpretation of deeming provisions
- Statutes Referenced: Arbitration Act (Cap 10, 2002 Rev Ed) (“AA”), in particular ss 4(1), 4(6) and s 6
- Cases Cited: [2021] SGCA 77; [2021] SGHC 28
- Judgment Length: 75 pages; 24,824 words
Summary
This Court of Appeal decision concerns whether the parties to a set of sale and purchase agreements (“SPAs”) were bound by an arbitration agreement, such that the purchasers’ court action should be stayed under the Arbitration Act (Cap 10, 2002 Rev Ed) (“AA”). The dispute arose from allegations that the developer, LVND Investments Pte. Ltd., made fraudulent misrepresentations and suppressed material facts that induced the purchasers to buy shop units in Macpherson Mall. The purchasers sought rescission or damages in court, while the developer applied to stay the proceedings in favour of arbitration.
The High Court had affirmed a stay, but on a different basis: it held that the clause in the SPAs (cl 20A.1) was not itself an arbitration agreement, yet found that the parties had nevertheless concluded an ad hoc arbitration agreement by their conduct. The High Court also expressed an obiter view that s 4(6) of the AA might “deem” the formation of an arbitration agreement even where no pre-existing arbitration agreement existed as a matter of fact. On appeal, the Court of Appeal rejected the High Court’s factual finding of an ad hoc arbitration agreement and addressed the important legal question whether s 4(6) could be relied upon to create or form a new arbitration agreement.
The Court of Appeal answered that question in the negative. It held that s 4(6) cannot be construed to permit the creation or formation of a new arbitration agreement through its deeming effect. Instead, for parties who have not denied the existence of an arbitration agreement, s 4(6) serves a limited purpose: it precludes them from relying on the absence of an arbitration agreement in writing to challenge validity for the purposes of the AA. Accordingly, the Court of Appeal did not uphold the stay and clarified the boundaries of the statutory deeming mechanism.
What Were the Facts of This Case?
The respondent, LVND Investments Pte. Ltd. (“the Developer”), developed Macpherson Mall (“the Mall”). The appellants comprised 16 purchasers at the start of the suit, who bought 12 shop units under 12 separate SPAs executed between 2013 and 2016. After a consent order in the appeal, the number of appellants increased to 13 parties (with some co-owners added), and the appeal proceeded on the basis that the appellants purchased a total of nine units under nine SPAs.
The purchasers’ claims were rooted in allegations that the Developer had engaged in fraudulent conduct. In particular, the purchasers alleged that the Developer made fraudulent misrepresentations and suppressed material facts that induced them to purchase their units. A central theme of the allegations was that the sizes of the units were smaller than what each purchaser believed they were buying. These allegations formed the basis of the purchasers’ court action seeking rescission of the SPAs or, alternatively, damages in lieu of rescission, together with damages for losses, costs and expenses incurred.
When the disputes arose, the purchasers engaged a law firm (“Former Solicitors”) that advised them to pursue arbitration. The Former Solicitors took the view that cl 20A.1 of the SPAs was an arbitration agreement. On 6 May 2019, they issued a Notice of Arbitration (“the 1st NOA”) against the Developer to commence arbitration under the auspices of the Singapore International Arbitration Centre (“SIAC”). The Developer’s solicitors (Rajah & Tann Singapore LLP (“R&T”)) responded by objecting to the proposed arbitration on multiple grounds, including that the Developer did not agree to SIAC administration, did not agree to the SIAC Rules, and did not agree to consolidation into a single arbitration.
As a result, the SIAC Court of Arbitration found it was not prima facie satisfied that the parties had agreed that SIAC would administer the arbitrations or that the SIAC Rules would apply. The SIAC accordingly terminated the arbitrations commenced by the 1st NOA. This was referred to as the “1st Attempted Arbitration”.
Undeterred, the purchasers’ Former Solicitors issued a second Notice of Arbitration (“the 2nd NOA”) on 28 June 2019. This second notice requested that the disputes be referred to an ad hoc arbitration in Singapore and nominated a sole arbitrator. The Developer objected in correspondence, characterising the purchasers’ approach as an attempt to consolidate different arbitrations into a single ad hoc arbitration. The correspondence continued, including discussions about the appointment of arbitrators and whether multiple ad hoc arbitrations would be required. Eventually, in February 2020, the purchasers notified the SIAC that they did not wish to proceed with the arbitration purportedly commenced by the 2nd NOA, and that attempt was discontinued. This was referred to as the “2nd Attempted Arbitration”.
On 4 March 2020, the purchasers filed the Suit (HC/S 204/2020). On 25 March 2020, the Developer filed an application seeking a stay of the Suit on the basis that the parties were bound by an arbitration agreement in cl 20A.1 of the SPAs, or alternatively that the parties had entered into an arbitration agreement by their conduct. The Assistant Registrar (“AR”) held that cl 20A.1 was not an arbitration clause, but found that the parties had entered into an arbitration agreement by their conduct and ordered a stay under s 6 of the AA. The High Court judge (“the Judge”) dismissed the Developer’s appeal against the AR’s conclusion on cl 20A.1, but upheld the stay on the basis of an ad hoc arbitration agreement formed by conduct, and also considered s 4(6) in obiter.
What Were the Key Legal Issues?
The Court of Appeal identified the central legal issues as follows. First, whether the parties had concluded a valid and binding arbitration agreement independent of cl 20A.1 of the SPAs. This required the court to assess whether the parties’ conduct—particularly their correspondence and responses around the attempted arbitrations—could amount to consensus to arbitrate on an ad hoc basis.
Second, the court had to consider whether s 4(6) of the AA could “deem” the existence of an arbitration agreement on the facts. This issue was especially significant because the High Court had found that cl 20A.1 was not an arbitration agreement, and the Court of Appeal was asked to determine whether the deeming provision could nonetheless supply the missing element of an arbitration agreement’s formation.
Third, the Court of Appeal also addressed whether the purchasers were estopped from denying the existence of an arbitration agreement, and whether a stay should be granted even if the statutory requirements were satisfied. However, the Court of Appeal’s reasoning ultimately turned on the threshold question of whether there was an arbitration agreement in the first place, and the proper scope of s 4(6).
How Did the Court Analyse the Issues?
The Court of Appeal began by emphasising the context and the parties’ conduct. It noted that the history of the dispute and the exchange of correspondence showed that the parties were “at loggerheads” on the terms of any intended reference to arbitration. In such circumstances, the Court of Appeal found it “intuitively questionable” to conclude that the parties nonetheless made an ad hoc arbitration agreement independent of the SPA clause that they had thought (incorrectly) was an arbitration agreement. This framing was important because it affected how the court assessed whether consensus could be inferred from conduct.
On the first issue—whether there was an ad hoc arbitration agreement—the Court of Appeal held that the High Court’s finding could not be upheld. The Court of Appeal’s approach indicates that the court required more than a series of unilateral steps by one side (such as issuing notices of arbitration) coupled with objections by the other. Where the parties’ correspondence reflected disagreement over fundamental matters (such as the administration of arbitration, the rules to be applied, consolidation, and the number of arbitrations and arbitrators), the court was not prepared to infer that a binding arbitration agreement had been reached by conduct.
Having rejected the existence of an ad hoc arbitration agreement as a matter of fact, the Court of Appeal turned to the legal question concerning s 4(6) of the AA. The High Court had expressed an obiter view that s 4(6) could operate to deem the formation of an arbitration agreement even if none existed as a matter of fact. The Court of Appeal treated this as a point of law requiring authoritative clarification: whether s 4(6), if applicable, could be relied upon to deem the existence of an arbitration agreement notwithstanding the court’s finding that none existed factually.
The Court of Appeal answered this question in the negative. It reasoned that s 4(6) cannot be construed to permit the creation or formation of a new arbitration agreement through its deeming effect. Instead, the deeming provision has a limited function. The Court of Appeal explained that for parties who have not denied the existence of an arbitration agreement, s 4(6) precludes them from relying on the absence of an agreement in writing to challenge the validity of such an arbitration agreement for the purposes of the AA. In other words, s 4(6) is not a mechanism to manufacture consent to arbitrate where consent is absent.
To reach this conclusion, the Court of Appeal undertook a statutory interpretation exercise. It considered possible interpretations based on the text and context of s 4(6), and then evaluated those interpretations against the legislative purpose and object. The court examined the development of the relevant legislative framework, including the influence of the 1985 Model Law, the introduction into domestic legislation and subsequent amendments to the AA, the 2006 Model Law, and later amendments in 2012. It also considered foreign authorities. This comparative analysis supported the Court of Appeal’s view that the deeming provision was intended to address formal requirements (such as writing) and not to replace the substantive requirement of agreement.
The Court of Appeal also referred to a decision in Machlogic (as mentioned in the judgment extract) to support its conclusion on the proper operation of s 4(6). While the extract does not reproduce the full discussion of Machlogic, the Court of Appeal’s reliance indicates that prior authority had already constrained the scope of deeming provisions and reinforced the principle that arbitration depends on party consent.
Accordingly, the Court of Appeal concluded that s 4(6) could not be used to deem an arbitration agreement into existence where the court had found that no arbitration agreement existed as a matter of fact. This meant that the stay application could not succeed on the basis of s 4(6). The Court of Appeal’s reasoning thus preserves the foundational arbitration principle that arbitration is consensual and that statutory deeming provisions cannot be stretched to create consent where none is established.
What Was the Outcome?
The Court of Appeal held that the High Court’s finding of an ad hoc arbitration agreement by conduct could not stand. It further held that s 4(6) of the AA could not be relied upon to deem the existence of an arbitration agreement where none existed as a matter of fact. As a result, the legal basis for staying the purchasers’ court proceedings in favour of arbitration was not established.
Practically, the effect of the Court of Appeal’s decision is that the purchasers were not required to arbitrate their disputes and could proceed with their court action rather than having it stayed under s 6 of the AA on the footing of an arbitration agreement.
Why Does This Case Matter?
This case is significant for practitioners because it clarifies the boundary between (i) inferring an arbitration agreement from party conduct and (ii) using statutory deeming provisions to supply missing elements of consent. The Court of Appeal’s insistence that s 4(6) cannot create or form a new arbitration agreement reinforces the consensual nature of arbitration under Singapore law.
For lawyers advising on arbitration clauses and dispute resolution mechanics, the decision highlights that correspondence and procedural steps (such as issuing notices of arbitration) will not automatically amount to consensus, particularly where the other party actively disputes the terms and scope of arbitration. Where parties disagree on core matters, courts are unlikely to infer an arbitration agreement by conduct.
For those litigating stay applications, the decision also provides a structured approach: courts must first determine whether an arbitration agreement exists as a matter of fact and law. Only then does the question of formal validity (including writing requirements) become relevant. The Court of Appeal’s interpretation of s 4(6) limits the utility of the deeming provision as a fallback argument and prevents parties from using it to bypass the threshold requirement of agreement.
Legislation Referenced
- Arbitration Act (Cap 10, 2002 Rev Ed), in particular:
- Section 4(1)
- Section 4(6)
- Section 6(1) and Section 6(2)
Cases Cited
- [2021] SGCA 77 (this case)
- [2021] SGHC 28 (High Court decision: Cheung Teck Cheong Richard and others v LVND Investments Pte Ltd)
- Machlogic (referenced in the Court of Appeal’s discussion of s 4(6))
Source Documents
This article analyses [2021] SGCA 77 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.