By Christine Ong and Tan Yi Lei - Virtus Law LLP, with assistance from Michelle Lam
Nature of Matter
Application under section 50(3) of the Arbitration Act (Cap. 10) (“Act”) for leave to appeal to the High Court on questions of law arising out of an arbitral award.
Case Summary
As in Ng Tze Chew Diana v Aikco Construction Pte Ltd and another matter [2019] SGHC 258.
On 14 June 2018 (28 days after receiving the award), the applicant commenced the present proceedings for leave to appeal 13 alleged questions of law arising from the award.
Ruling
The Singapore High Court dismissed the application because it did not grant an extension of time for the applicant to apply for leave to appeal. It also found that the applicant’s application for leave to appeal against the award was, in any event, hopeless and bound to fail.
Construction of section 50(3)
The applicant submitted that there was no need to apply for an extension of time given that the words “date of the award” in section 50(3) of the Act should be read to mean the “date when the parties received the award”.
The Court found that the applicant’s construction of section 50(3) of the Act wholly unmeritorious and found that the “date of the award” refers literally to the date which the arbitrator dated the award. The Court referred to Hong Huat Development Co (Pte) Ltd v Hiap Hong & Co Pte Ltd [2000] 1 SLR(R) 510 (“Hong Huat”) (in the context of an earlier iteration of the Act) that an award is made and published when the arbitrator gives notice to the parties that the award is ready for collection. It should be noted that the previous iteration of the Act provided that the notice to appeal had to be served and appeal entered within 21 days after the award was made and published to the parties. The two reasons for this were that is ensures prompt action by the parties and it accords better with the legislative policy underlying the reference to arbitration – i.e. the expeditious resolution of disputes that are subject to arbitration and the need for finality.
When the Act was amended sometime in 2001, the Attorney-General’s Chambers in the Review of Arbitration Laws Report LRRD No 3, 2001 proposed that the phrase “made and published to the parties” should be replaced with “date of the award” to “provide a certain and incontrovertible date for reckoning of time set for appeal”. The Court therefore found that the “date of the award” in section 50(3) of the Act refers literally to the date which the arbitrator dated the award. This is further supported by the contrast with section 48(2) of the Act which provides that a setting aside application may not be made after the expiry of three months from the date “on which the party making the application had received the award”.
Whether an extension of time should be granted
The Court found that all factors weighed heavily against the applicant in granting an extension of time. The Court considered the length of the delay; the reasons for the delay; the prospects of success if time for appealing was extended; and the degree of prejudice suffered by the respondent, if any, should an extension of time be granted.
Length of Delay
There was a substantial delay of over nine and a half months in making the application for leave to appeal given that time would start running from 25 July 2017 (the date of the award) and the last day for the applicant to file her application for leave to appeal was therefore 22 August 2017. On a review of the case law, it was found that 49 days past the statutory time limit was regarded as very substantial. Further, the only substantial extension of time granted in Singapore (of about 3 months) in Hong Huat could be distinguished from the present case as parties there were engaged in settlement negotiations and there was an understanding that time would not begin to run while parties were in the midst of negotiations. Further, in Hong Huat, there was a question of law that could substantially affect a party’s rights and no prejudice would be caused to the other party.
Reasons for Delay
The applicant submitted that she had excusable reasons for the delay – i.e. that it was not reasonable to expect her to pay the S$57,929.17 as she might not be able to recover payment in the event the award was in her favour given that the respondent may be impecunious and the applicant was unable to afford the respondent’s share given that she was no longer employed and she had been unable to sell the property owing to the respondent’s allegedly defective works.
The Court found the onus is on the parties, who are jointly and severally liable for the fees of the arbitrator, to ensure that the terms of the release of the award are promptly complied with so that it has sufficient time within the statutory time limit to file its appeal. This is given that parties were jointly and severally liable to the arbitrator for his fees. If the respondent was unable to make payment, whether for reasons of insolvency or otherwise, the applicant is obliged to make such payment. The applicant had therefore made a deliberate decision not to make the necessary payment to the arbitrator.
Further, the Court found that the applicant’s submission that it was unable to pay the arbitrator’s fees unconvincing as it was contradicted by evidence – i.e. the applicant was in possession of the property in dispute and had refused to accept 2 offers of S$6.18m and S$6.3m as she was of the view her property was worth S$7m.
Chances of appeal succeeding
The Court provided a useful summary of the conditions to be met before leave to appeal will be granted. The appeal must be on a question of law (section 49(1) of the Act); the determination of that question will substantially affect the rights of one or more of the parties to the arbitration (section 49(5)(a) of the Act); the question was one which the arbitrator was asked to determine (section 49(5)(b) of the Act); on the basis of the findings of fact in the award, the decision of the arbitrator on the question is obviously wrong, or the question is one of general public importance and the decision of the arbitral tribunal is at least open to serious doubt (section 49(5)(c) of the Act); and despite the agreement of the parties to resolve the matter by arbitration, it is just and proper in all the circumstances for the Court to determine the question (section 49(5)(d)) of the Act). In particular, the Court elaborated on what is a question of law – a question of law is distinct from an error of law and relates specifically to a “point of law in controversy” and does not extend to errors in the application of the law.
Of the 13 alleged questions of law submitted by the applicant, the Court found that most of the questions raised were not questions of law and/or would not substantially affect the rights of the parties even if such questions were answered by the Court. The applicant’s application for leave to appeal against the award was therefore hopeless and bound to fail.
Prejudice to respondent
The Court found that there will be a degree of prejudice suffered by the respondent if an extension of time was granted to the applicant to apply for leave to appeal because of the length of delay by the applicant in bringing this application.
As mentioned earlier, one of the legislative policies underlying the reference to arbitration is that parties to arbitration should have autonomy and finality in the determination of disputes as well as the expeditious resolution of the dispute. These principles are reflected in the short time limits for parties to raise challenge to an award and any delay in receiving payment of the sum awarded and any additional expense incurred in enforcing the award would cause irremediable prejudice. Any attempt by the unsuccessful party to challenge the merits of an award must therefore be carefully scrutinised because it delays the successful party’s rights to the fruits of its success.