Case Details
- Citation: [2021] SGCA 77
- Title: RICHARD CHEUNG TECK CHEONG & 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: Richard Cheung Teck Cheong & 8 Ors (13 appellants in total at appeal stage)
- Respondent / Defendant: LVND Investments Pte Ltd
- Underlying Dispute: Alleged fraudulent misrepresentations and suppression of material facts in sale of shop units in Macpherson Mall; purchasers claim rescission or damages
- Arbitration Context: Whether there was an arbitration agreement (including by conduct) and whether s 4(6) of the Arbitration Act could “deem” an arbitration agreement
- Statutory Provisions Referenced (from extract): Arbitration Act (Cap 10, 2002 Rev Ed) (“AA”), including ss 4(1), 4(6), and s 6
- Cases Cited (as provided): [2021] SGCA 77; [2021] SGHC 28
- High Court Decision Cited: Cheung Teck Cheong Richard and others v LVND Investments Pte Ltd [2021] SGHC 28 (“the GD”)
- Judgment Length: 75 pages, 24,824 words
Summary
This Court of Appeal decision concerns whether parties to sale and purchase agreements (“SPAs”) were bound to arbitrate disputes, and—critically—whether the statutory deeming provision in s 4(6) of the Arbitration Act (Cap 10, 2002 Rev Ed) (“AA”) can create an arbitration agreement where none exists as a matter of fact. The dispute arose from allegations by purchasers that the developer made fraudulent misrepresentations and suppressed material facts, inducing them to buy shop units in Macpherson Mall. The purchasers sought relief in court, while the developer applied for a stay on the basis that the parties were bound by arbitration.
At first instance, the Assistant Registrar (“AR”) and the High Court judge (“the Judge”) concluded that although cl 20A.1 of the SPAs was not itself an arbitration agreement, the parties had entered into an arbitration agreement by their conduct. The Judge also expressed an obiter view that s 4(6) of the AA could operate to deem formation of an arbitration agreement even if there was no pre-existing arbitration agreement. On appeal, the Court of Appeal rejected the factual finding of an ad hoc arbitration agreement and held that s 4(6) cannot be construed to permit the creation or formation of a new arbitration agreement through its deeming effect. The Court therefore decided the question in the negative and refused to stay the suit on that basis.
What Were the Facts of This Case?
The respondent, LVND Investments Pte Ltd (“the Developer”), developed Macpherson Mall (“the Mall”). Between 2013 and 2016, 16 purchasers entered into 12 separate SPAs (and later, for the appeal, nine SPAs involving nine units) with the Developer to acquire shop units. The purchasers’ claims against the Developer were rooted in allegations that the Developer made fraudulent misrepresentations and suppressed material facts. In particular, the purchasers alleged that the sizes of their units were smaller than what they believed they were purchasing.
When the disputes arose, the purchasers engaged a law firm (the “Former Solicitors”), which advised them that cl 20A.1 of the SPAs was an arbitration agreement. Acting on that advice, the Former Solicitors issued a Notice of Arbitration on 6 May 2019 (“the 1st NOA”) to commence arbitration under the auspices of the Singapore International Arbitration Centre (“SIAC”). The Developer objected. Specifically, the Developer’s solicitors (Rajah & Tann Singapore LLP (“R&T”)) objected to (a) SIAC administration, (b) the application of SIAC Rules, and (c) consolidation of disputes into a single arbitration. The SIAC Court of Arbitration found it was “not prima facie satisfied” that the parties had agreed SIAC administration or the application of SIAC Rules, and terminated the arbitrations commenced by the 1st NOA. This episode is referred to as the “1st Attempted Arbitration”.
Undeterred, on 28 June 2019 the purchasers’ Former Solicitors issued a second Notice of Arbitration (“the 2nd NOA”). This time, the 2nd NOA sought an ad hoc arbitration in Singapore and nominated a sole arbitrator. The Developer again objected. In a letter dated 2 July 2019, R&T objected to what it regarded as an attempt to consolidate different arbitrations into a single ad hoc arbitration. Further correspondence followed, including the purchasers’ attempt to seek appointment of a single arbitrator from the President of the SIAC Court of Arbitration. R&T maintained that no valid ad hoc arbitration had been commenced and argued that if arbitration was to proceed, it would require multiple ad hoc arbitrations and multiple arbitrators. R&T also disagreed with the purchasers’ nomination of a sole arbitrator.
In September 2019, the purchasers obtained different legal advice. They discharged the Former Solicitors and engaged present counsel. On 3 February 2020, the purchasers notified SIAC that they did not wish to proceed against the Developer by way of the arbitration proceedings purportedly commenced by the 2nd NOA, and the attempt was discontinued. The purchasers then commenced court proceedings on 4 March 2020, filing Suit No 204 of 2020 seeking rescission of the SPAs or damages in lieu of rescission, and damages for losses, costs and expenses arising from entering into the SPAs.
What Were the Key Legal Issues?
The Court of Appeal framed the appeal around the existence and effect of an arbitration agreement, including whether any arbitration agreement could be inferred from the parties’ conduct. The High Court had identified multiple issues for determination, including whether the parties concluded a valid and binding arbitration agreement independent of cl 20A.1, whether s 4(6) of the AA applied to deem an arbitration agreement, and whether any such agreement would be vitiated by mistake or whether the purchasers were estopped from denying an arbitration agreement. The Court of Appeal’s reasoning, as reflected in the extract, focused particularly on two connected questions: (1) whether there was in fact an ad hoc arbitration agreement independent of cl 20A.1; and (2) if not, whether s 4(6) could nonetheless deem an arbitration agreement into existence.
At the heart of the legal controversy was the Court’s treatment of s 4(6) of the AA. The Judge below had expressed an obiter view that s 4(6) could operate to deem formation of an arbitration agreement even absent a pre-existing arbitration agreement. The Court of Appeal considered whether that interpretation was correct, and whether s 4(6) could be relied upon to overcome a court’s factual finding that no arbitration agreement existed. This raised an important doctrinal question about the boundary between (a) deeming procedural or evidential consequences under the AA and (b) creating substantive contractual consent to arbitrate.
How Did the Court Analyse the Issues?
The Court of Appeal began by placing the dispute in its procedural and correspondence context. It emphasised that the parties were “at loggerheads on just about everything” concerning the terms of an intended reference to arbitration. That conduct mattered because arbitration agreements are founded on party consent. While the Court acknowledged the intuitive awkwardness of concluding that parties nonetheless made an ad hoc arbitration agreement independent of a clause they had thought (incorrectly) was an arbitration clause, it did not treat that as merely an intuitive concern. Instead, it treated the correspondence history as relevant to whether the objective facts could support a finding of consensus to arbitrate.
First, the Court of Appeal held that the High Court’s finding that the parties made an ad hoc arbitration agreement independent of cl 20A.1 could not be upheld. The extract indicates that the Court considered the Judge’s approach to be inconsistent with the factual matrix: the parties’ repeated objections to the proposed arbitration framework, the SIAC termination of the 1st Attempted Arbitration for lack of prima facie satisfaction of agreement on SIAC administration and rules, and the subsequent 2nd NOA episode, all pointed away from a concluded ad hoc agreement. The Court therefore rejected the premise that there was a factual arbitration agreement formed by conduct.
Second, the Court addressed the legal question about s 4(6) of the AA. The Court framed the issue as 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 as a matter of fact. The Court answered 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. In other words, the deeming provision does not substitute for the substantive requirement of consent to arbitrate; it operates within a narrower space.
In reaching this conclusion, the Court analysed the legislative purpose and object of s 4(6). The extract indicates that the Court compared possible interpretations based on text and context, including reference to the 1985 Model Law, the introduction into domestic legislation and amendments to the AA, the 2006 Model Law, and the 2012 amendments. It also considered foreign authorities. The Court’s conclusion on legislative purpose was that the deeming effect is limited. It serves, for parties who have not denied the existence of an arbitration agreement, to preclude them from relying on the absence of an agreement in writing to challenge validity for the purposes of the AA. The Court therefore treated s 4(6) as a provision that addresses a specific evidential or formal requirement (writing) rather than a mechanism to manufacture consent where none exists.
The Court also referred to a decision in Machlogic (as mentioned in the extract) as part of its analysis. While the extract does not reproduce the holding in Machlogic, the Court’s use of that authority signals that it considered prior jurisprudence on the scope of s 4(6). The Court’s ultimate “conclusion on s 4(6)” was that the provision cannot be used to overcome a factual absence of an arbitration agreement. This is consistent with the Court’s earlier statement that, for parties who have not denied an arbitration agreement, s 4(6) precludes reliance on the absence of an agreement in writing to challenge validity; it does not permit formation of a new arbitration agreement.
Finally, because the Court rejected both the factual finding of an ad hoc arbitration agreement and the legal proposition that s 4(6) could deem one into existence, the stay analysis necessarily failed. The extract indicates that the Court considered whether the appellants were estopped from denying the existence of an arbitration agreement and whether the suit should be stayed. However, the core doctrinal barrier was that there was no arbitration agreement to be deemed or enforced. Without an arbitration agreement, the statutory basis for a stay under s 6 of the AA could not be sustained.
What Was the Outcome?
The Court of Appeal allowed the appeal in substance by overturning the High Court’s conclusion that an ad hoc arbitration agreement existed and by rejecting the interpretation of s 4(6) that would allow an arbitration agreement to be created through deeming. The Court decided the question in the negative: s 4(6) cannot be relied upon to deem the existence of an arbitration agreement where none exists as a matter of fact.
Practically, the effect of the decision is that the purchasers’ court proceedings were not stayed in favour of arbitration on the basis of an arbitration agreement that the Court concluded did not exist. The Developer therefore could not compel arbitration through the combined route of (i) an ad hoc agreement inferred from conduct and (ii) the deeming mechanism of s 4(6).
Why Does This Case Matter?
This case is significant for arbitration practitioners because it clarifies the limits of statutory deeming under Singapore arbitration law. Parties sometimes attempt to use s 4(6) as a safety net when formal requirements or written evidence of an arbitration agreement are disputed. The Court of Appeal’s reasoning draws a firm line: s 4(6) is not a tool for manufacturing consent to arbitrate. It cannot convert a non-existent arbitration agreement into an enforceable one.
For lawyers advising clients on arbitration clauses and dispute resolution, the decision underscores the centrality of objective consent. Where parties’ correspondence and conduct show persistent disagreement about the existence or terms of arbitration, courts will scrutinise whether there is a concluded agreement. The Court’s emphasis on the “loggerheads” context and the termination of SIAC proceedings for lack of prima facie satisfaction illustrates that procedural attempts to arbitrate do not automatically crystallise into a binding arbitration agreement.
From a drafting and litigation strategy perspective, the case also highlights the importance of clause interpretation and the consequences of relying on a clause that is not, in fact, an arbitration agreement. If parties intend arbitration, they must ensure that the contractual language objectively evidences that intention. Moreover, if arbitration is to be commenced, parties should be careful that their actions do not inadvertently create ambiguity about whether an arbitration agreement has been formed. This decision will likely be cited in future disputes involving the scope of s 4(6) and the interplay between factual findings on agreement and statutory deeming provisions.
Legislation Referenced
- Arbitration Act (Cap 10, 2002 Rev Ed) (“AA”), including:Section 4(1)
- Section 4(6)
- Section 6 (stay of court proceedings in respect of matters subject to arbitration)
Cases Cited
- [2021] SGCA 77 (this case)
- [2021] SGHC 28 (Cheung Teck Cheong Richard and others v LVND Investments Pte Ltd)
- Machlogic (referenced in the extract; full citation not provided)
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.