Judgment

AP Rajah J

1. By a written agreement dated 15 November 1975 made between the defendants and the plaintiffs the defendants agreed to erect and complete for the plaintiffs a 19-storey apartment block at Thomson Road on the terms and conditions therein contained.

2. Clause 25(1) of the said agreement provided for the determination of the contract by the employer, in the instant case the plaintiffs, and it reads as follows:

   If the contractor shall make default in any one or more of the following respects, that is to say: (a) If he without reasonable cause wholly suspends the carrying out of the Works before completion thereof, or (b) If he fails to proceed regularly diligently with the works, or (c) If he refuses or persistently neglects to comply with a written notice from the architect requiring him to remove defective work or improper materials or goods and by such refusal or neglect the works are materially affected, or (d) If he fails to comply with the provisions of cl 17 of these conditions, then the architect may give to him a notice by registered post or recorded delivery specifying the default, and if the contractor either shall continue such default for fourteen days after receipt of such notice or shall at any time thereafter repeat such default (whether previously repeated or not), then the employer without prejudice to any other rights or remedies, may within ten days after such continuance or repetition by notice by registered post or recorded delivery forthwith determine the employment of the contractor under this contract provided that such notice shall not be given unreasonably or vexatiously.

3. On 17 May 1978 the architects in charge of the project under the contract acting under cl 25(1) wrote to the defendants by AR Registered Post as follows:

   M/s Artic Builders & Co Pte Ltd 50 Somme Road, Singapore 8 Dear Sirs, Contract Between Tan Tong Meng Co Pte Ltd and Yourselves for Construction of One Block of 19-Storey Apartments on Lots 2461 MK 17 at Thomson Road, Singapore known as Tan Tong Meng Tower We refer to our letters dated 24 and 27 April, two letters dated the 3 May, and letters dated 13 May and 16 May 1978. Copies of these letters are attached hereto for your convenient reference. We have repeatedly pointed out to you the defects in your work, the deliberate delay and from time to time the total suspension of work by you and to properly and diligently carry out the works by you. The employers, Tan Tong Meng Co Pte Ltd would now give you formal notice that you are to forthwith carry out our instructions as already been given to you. In particular the instructions are: (a) To hack off and re-plaster the portions of walls and ceilings pointed out to you as defective and to re-paint them in accordance with our letter of 27 April 1978 (copy of which is attached). In this respect although we have asked you to attend to these defects, first of all in Units A and B on the first floor, you have not up to date satisfactorily and completely done so. You have therefore to forthwith attend to all the defects in Units A and B on the first floor in accordance with the second paragraph of our letter of the 27 April 1978 and let us give our approval before you may proceed with the other units. (b) At all times you shall have a sufficient number of workers attending to the works at the site so that there will be a maintenance of the progress of work that will meet with our satisfaction. In other words therefore there shall be no further delay or suspension of work and that all the works relating to repairing or rectification of defects and completion of the construction of the whole building must be carried out properly, regularly and diligently. Please take notice that if you should fail to comply with this notice the employers Tan Tong Meng Co Pte Ltd will exercise their right to determine the contract under cl 25(1). The employers Tan Tong Meng Co Pte Ltd reserve the right at all times to claim liquidated and other damages against you. Yours faithfully, Sgd Ong Siew May

4. This letter was followed up by an AR Registered letter dated 2 June 1978 from the plaintiffs’ solicitors under cl 25(1) purporting to terminate the contract and it reads as follows:

   Messrs Donaldson & Burkinshaw Clifford Centre Raffles Place Singapore 1 Dear Sirs, Contract No R10/72 between Tan Tong Meng Co Pte Ltd and Artic Builders & Co Pte Ltd for construction of one block of 19-storey apartments on Lot 2461, Mukim 17 at Thomson Road, Singapore, known as Tan Tong Meng Tower We act for Tan Tong Meng Co Pte Ltd We understand that you are acting for Artic Builders & Co Pte Ltd. Our clients have referred to us the contract dated 15 November 1975 which they have entered into with your clients for the above project. We are instructed that your clients have failed to complete the project which should have been completed by the 25 July 1977 as provided in the contract. Under cl 22 of the contract, your clients are therefore liable to our clients the sum of $500 for each and every day of the delay. Our clients’ architects Messrs Ong & Ong have written to your clients on 27 May 1978 claiming the sum of $153,000 being the liquidated damages provided for at $500 a day for the delay of completion for the period from 26 July 1977 to 27 May 1978 (a period of 306 days). Please note that this claim for liquidated damages is not final and it is accruing day by day until the project is completed. We are further instructed to refer to the architects’ notice to your clients dated the 17 May 1978 under cl 25(1) of the contract. The architects have requested your clients to attend to certain things as stated in notice. However up to date your clients have failed to comply with them. Therefore as provided by the contract, our clients now exercise their right to forthwith terminate the contract. Your clients are hereby required to forthwith remove their tools from the site and henceforth your clients and their workmen will not be allowed to enter the site. Our clients are engaging other contractors to complete the works and all the costs involved therein will be referred to your clients. Our clients reserve the right to claim all the damages against your clients to which they are entitled. Yours faithfully, Sgd SK Lee & Co

5. Towards the end of June 1978 all matters in dispute between the parties were referred to a single arbitrator who published his reasoned interim award on 9 May 1979.

6. By originating motion No 39 of 1979 the plaintiffs sought to set aside, vary or remit to the arbitrator the interim award on the five following grounds namely:

   1.	That the interim award does not deal with all the matters referred to by the arbitrator for his decision.
   2.	That the said interim award is bad on the face of it because the principle therein stated as the principle of law according to which the said arbitrator proposed to make his award is erroneously stated or applied.
   3.	That the said interim award, predicated as it is, upon the limited issues and facts that may have fitted into the framework of cl 25(1)(c) of the agreement dated 15 November 1975 between the plaintiffs and the defendants has not considered all the other issues, facts and matters that were germane to the question of whether the plaintiffs’ termination of the said agreement was legally valid. In this respect, the learned arbitrator erred in law in basing his said interim award upon his limited construction of cl 25(1)(c) of the agreement instead of basing his award on a construction of the whole of cl 25(1) of the said agreement under which the plaintiffs had terminated the said agreement. In so limiting his vision to a construction of cl 25(1)(c) only the learned arbitrator had erred in law in directing his mind only to the issue of internal plastering and not also to the other wider breaches of contract by the defendants relied upon by the plaintiffs to terminate the said agreement.
   4.	That the said interim award is unclear and ambiguous on the issues of liability that were raised in the pleadings that were filed in the arbitration.
   5.	That the learned arbitrator erred in law in ruling that the plaintiffs had not complied with the provisions of cl 25(1)(c).

7. The motion was heard on third and fourth days of March 1980 when I directed that:

   1. The case be remitted to the arbitrator, Mr. HE Cashin, on the question of whether the respondents had made cl 25(1)(a) and cl 25(1)(b) of the Building Contract dated the 15 November 1975 part of their case, and if so, the arbitrator do make his findings on the respondents’ case under these clauses.

   2. The costs of the motion be reserved with liberty to apply on the question of costs.

8. The remission went to the arbitrator and he published his findings pursuant to order of court of 4 March 1980. Arising from the said findings the plaintiffs have now filed another originating motion No 31/80 wherein they seek an order that the said interim award as amplified by his said findings may be set aside, varied or remitted to the arbitrator for reconsideration on seven grounds. The first five grounds relied on are the same as those in the first motion. The other sixth and seventh grounds are new and they read as follows:

   6.	That the learned arbitrator erred in law in ruling in effect that it was sufficient for the defendants to try their best to comply with instructions instead of directing his mind to whether the defendants had fulfilled their obligations under the contract. This is again an error on the face of the interim award.
   7.	That the learned arbitrator had misconducted himself by showing bias against the plaintiffs and failing to observe the rules of natural justice during the remission hearing that took place on 2 April 1980 pursuant to the order made by the Honourable Mr. AP Rajah J on the 4 March 1980 in originating motion No 39 of 1979.

9. Counsel for the defendants took a preliminary objection to the second motion. He said that the first five grounds were the same as those in the first motion and as the first motion had been disposed off on 4 March 1979 the defendants could not rely on them again. He went on to say that ground No 6 alleged an error on the face of the interim award and that the plaintiffs could not now raise an allegation of an error on the face of the interim award and that the plaintiffs should have raised this on the first motion. For these reasons counsel urged me to dismiss the motion on the ground that it was frivolous, vexatious and an abuse of the process of the court. I agree with counsel that in view of the order of court of 4 March 1980 it is not now open to the plaintiffs to ask the court to go into matters which it did go into before it made the said order. As for ground No 6 it could have been raised in the first motion: the plaintiffs cannot now be allowed to raise it in the present motion. Further counsel referred me to paras 5 and 6 of the affidavit of Tan Wai See, a director of the plaintiffs, sworn to and filed on 12 May 1980 in the first motion, wherein he refers to

   1. the refusal of the arbitrator to make available to plaintiffs’ counsel his notes of evidence

   2. the refusal of the arbitrator to allow counsel to make submissions and

   3. the technical misconduct of the arbitrator.

   This affidavit was filed in respect of the restored hearing on the question of costs which had been reserved. Counsel for the defendants suggested to me that perhaps I had taken into consideration these allegations before I awarded costs to the defendants on the first motion. So far as the court was concerned these allegations concerned the remission hearings and had no bearing on whether the defendants should or should not get their costs on the first motion.

10. As for ground No 7, it relates to a new situation which did not exist when the said order was made. It stems directly from the said findings of the arbitrator and, in my view, can therefore be properly raised by the plaintiffs now.

11. At the outset of the arbitration hearing it was agreed that the award was to be a speaking one. In his interim award the arbitrator made everything that had been placed before him part of his interim award except for the evidence that had been recorded by him and the submissions made to him by counsel. His interim award had been formulated in such a way that there appeared to be ambiguity and uncertainty in it and if the ambiguity and uncertainty could not be cured then the award would have had to be set aside on the basis of an error in law on the face of it. Had his notes of the hearing been made part of the interim award there would probably have been no necessity for the court to remit the matter back to him for clarification. The court with the aid of his notes would have been in a position to deal with the matters raised in the motion.

12. It was to cure this ambiguity and uncertainty that, at the suggestion of Mr. Wu, counsel for the defendants, to which Mr. Selvadurai readily agreed, that I made the order for remission on 4 March 1980. The logical way to resolve the ambiguity and uncertainty, in my view, would have been for the notes to be looked at by the arbitrator and counsel and not to have called to aid the perhaps uncertain recollection of busy and over-worked counsel. Their recollection of the arbitration proceedings should have been sought for, in my view, only if the notes for some reason or other had become unavailable for the use of the arbitrator and counsel.

13. I would have thought that the easiest and simplest way for the arbitrator to have responded to the order for remission was for him to have referred to his notes and inform counsel of what had been recorded by him in them and, if requested by counsel, then to have made available to them the undisclosed part of the notes of the hearing, as the primary purpose of the remission was to ascertain what had been submitted by counsel at the hearing. When counsel for the respondents (the plaintiffs herein) asked the arbitrator for the notes of evidence so that he could find out for himself whether cl 25(1)(b) had been relied on he was refused such request. The reason the arbitrator gives for his refusal is that, as he had not made his notes part of his interim award, he could not at the remission hearing give inspection of his notes as this would have been a variation of his interim award, which he was not empowered to do. And yet on page 5 of his findings he quotes from his notes of evidence which was not part of his Interim Award and which he had denied a sight of to the plaintiffs. It reads as follows:

    Confine evidence to the issue as to whether determination of contract was justified. 25(1)(c) of contract. Three documents. (1) Minutes of 23 March 1978. (2) Minutes of 17 May 1978. (3) Minutes of 2 June 1978.

14. In my view the arbitrator misdirected himself when he said that for the purposes of the remission hearing the notes of evidence, not having been made part of the interim award, could not be availed of by either party for clarification as to what happened at the original hearing. This refusal of the arbitrator to make available the notes of evidence for clarification purposes to the plaintiffs resulted, in my view, in the plaintiffs not getting the kind of hearing intended by the remission, that is to say, a fair hearing.

15. Further, it cannot be right in principle for an arbitrator to rely on or quote in justification of his award from a document which he had expressly excluded from his interim award and which he had refused the party adversely affected a sight of.

16. There are two parts to the remission order,

    1. whether the respondents had made cll 25(1)(a) and 25(1)(b) of the Building Contract dated 15 November 1975 part of their case and

    2. if so, the arbitrator do make his findings on the respondents’ case under these clauses.

17. On the first part of the order he makes a specific finding on cl 25(1)(a) but he does not make a specific finding on cl 25(1)(b) as he had on cl 25(1)(a), although it would appear that, from what was said at the remission hearing, counsel for the respondents at the original arbitration hearing had not abandoned cl 25(1)(b) but had concentrated on cl 25(1)(c). In my judgment this is not an unusual stance for a counsel to take.

18. On the second part of the order the arbitrator was to make his findings on the respondents’ case under these clauses. On this he ruled that he would not reopen the case and would hear no further submissions as to what notices were given which satisfied termination under cl 25(1)(b). The case was remitted to him for a specific purpose, and the parties were represented by counsel. It is implicit in our system of justice that parties or their counsel should be heard before judgment is pronounced. But the arbitrator ruled that he would hear neither party, presumably for the reason, as he says on p 2 of his Findings, that he had perused his notes of evidence carefully. Mr. Wu urges me to say that as both parties were treated in the same way there can be no failure of justice. I cannot accept his proposition. Both counsel would complain, and in my opinion rightly, most bitterly if they were not allowed by the court to address it before a finding of fact or in law is made. On the question of the Arbitrator failing to give the parties a proper opportunity of arguing their case see Russell on Arbitration (9th Ed) at p 469 where the learned author sets out in summary form what the case of Societe Franco-Tunisienne D’Armement-Tunis v Government of Ceylon [1959] 1 WLR 787 decided and why the award was remitted.

19. In E Rotheray & Sons Ltd v Carlo Bedarida & Co [1961] 1 Ll LR 220, 225 at the end of the motion to set aside or remit McNair J observed:

    The remaining question is whether this award should be wholly set aside or should be remitted to the arbitrators. As regards that, I feel it would be very difficult indeed for Mr. Todd, having once committed himself to the view to which he has committed himself in the award which is sought to be set aside, with the best will in the word, to approach the question with an entirely free mind. I think it is much more likely that justice would be done between the parties if this award were set aside. It will then be open to the parties to take such steps as they think fit to resolve their present dispute. Accordingly, the order of the court will simply be that the award referred to in the notice of motion will be set aside.

20. I respectfully adopt the words and reasoning of the learned judge and set aside the interim award. It is now open to the parties to take such action as they deem fit to resolve their present dispute.

21. Lastly it would, I think, be remiss on my part if I did not say that during the course of the hearing both counsel referred me to a number of authorities all of which in their sum total were not unhelpful.

Cases

E Rotheray & Sons v Carlo Bedarida & Co [1961] 1 Lloyd Rep 220; Societe Franco-Tunisienne D’Armement-Tunis v Government of Ceylon [1959] 1 WLR 787

Authors and other references

Russell on Arbitration (9th Ed)

Representations

P Selvadurai (Rodyk & Davidson) for the plaintiffs.

CS Wu (Donaldson & Burkinshaw) for the defendants.