CSY v CSZ: Stay of Court Proceedings & Court's Discretion Under Arbitration Act
In CSY v CSZ, the Court of Appeal of Singapore heard an appeal by CSY against the High Court's decision to stay part of its claim in favour of domestic arbitration. The claim concerned breaches of contractual and tortious duties by CSZ, the external auditor, for failing to detect misstatements in financial statements from FY2014 to FY2019. The Court of Appeal allowed the appeal, finding sufficient reason not to stay the court proceeding due to the significant overlap in disputed issues across the financial years.
1. Case Overview
1.1 Court
Court of Appeal of the Republic of Singapore1.2 Outcome
Appeal Allowed
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
The court addressed the discretion to stay court proceedings for domestic arbitration, allowing an appeal due to significant overlap in disputed issues.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| CSY | Appellant | Corporation | Appeal Allowed | Won | Cavinder Bull, Chia Voon Jiet, Sim Bing Wen, Tan Shihao Sean, Benjamin Tan Zhi Xiong |
| CSZ | Respondent | Limited Liability Partnership | Appeal Dismissed | Lost | Lin Weiqi Wendy, Monica Chong Wan Yee, Leow Jiamin, Wong Chun Mun |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Sundaresh Menon | Chief Justice | Yes |
| Andrew Phang Boon Leong | Justice of the Court of Appeal | No |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Cavinder Bull | Drew & Napier LLC |
| Chia Voon Jiet | Drew & Napier LLC |
| Sim Bing Wen | Drew & Napier LLC |
| Tan Shihao Sean | Drew & Napier LLC |
| Benjamin Tan Zhi Xiong | Drew & Napier LLC |
| Lin Weiqi Wendy | WongPartnership LLP |
| Monica Chong Wan Yee | WongPartnership LLP |
| Leow Jiamin | WongPartnership LLP |
| Wong Chun Mun | WongPartnership LLP |
4. Facts
- CSY filed a claim against CSZ for failing to detect material misstatements in audited financial statements.
- The claim related to audits for FY2014 to FY2019.
- Engagement letters for FY2016 and FY2017 contained an exclusive jurisdiction clause in favour of Singapore courts.
- Engagement letters for FY2018 and FY2019 contained a tiered arbitration agreement.
- CSZ sought a stay of the dispute pertaining to the audits for FY2018 and FY2019 in favour of arbitration.
- CSZ sought a stay of the dispute pertaining to the audits for FY2014 to FY2017 pending the completion of the steps in the Tiered Arbitration Agreement.
- The High Court granted the stay.
5. Formal Citations
- CSY v CSZ, Civil Appeal No 67 of 2021, [2022] SGCA 43
6. Timeline
| Date | Event |
|---|---|
| CSZ engaged as CSY's external auditor. | |
| Former managing director of CSY admitted irregularities. | |
| JMs’ First Report issued. | |
| CSZ resigned as external auditor. | |
| JMs’ Second Report issued. | |
| CSY filed Statement of Claim in S 237. | |
| CSZ filed SUM 2888 seeking a stay of proceedings. | |
| CSY amended Statement of Claim in S 237. | |
| Judge allowed SUM 2888. | |
| CSY appealed against the decision of the Judge. | |
| Parties heard in Court of Appeal. | |
| Judgment delivered. |
7. Legal Issues
- Stay of Court Proceedings
- Outcome: The court held that there was sufficient reason not to stay the court proceeding and refer the matter to arbitration.
- Category: Procedural
- Sub-Issues:
- Multiplicity of proceedings
- Risk of inconsistent findings
- Court's Discretion Under Arbitration Act
- Outcome: The court clarified the factors to consider when exercising its discretion to refuse a stay of proceedings in favour of domestic arbitration.
- Category: Procedural
- Sub-Issues:
- Sufficient reason to refuse stay
- Readiness and willingness to arbitrate
8. Remedies Sought
- Monetary Damages
9. Cause of Actions
- Breach of Contract
- Negligence
10. Practice Areas
- Commercial Litigation
- Arbitration
11. Industries
- Accounting
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Tomolugen Holdings Ltd and another v Silica Investors Ltd and other appeals | Court of Appeal | Yes | [2016] 1 SLR 373 | Singapore | Cited for the principle that the court should take the lead in ensuring the efficient and fair resolution of the dispute as a whole, balancing the plaintiff's right to choose whom to sue and where, preventing circumvention of arbitration clauses, and the court's inherent power to manage its processes. |
| Maybank Kim Eng Securities Pte Ltd v Lim Keng Yong and another | High Court | Yes | [2016] 3 SLR 431 | Singapore | Cited for the principle that the court may exercise its discretion to allow all claims, including those governed by the arbitration agreement, to proceed in the courts, but this discretion is to be exercised in a guarded manner. |
| Tjong Very Sumito and others v Antig Investments Pte Ltd | High Court | Yes | [2009] 4 SLR(R) 732 | Singapore | Cited for the principle that the courts have a somewhat wider role and broader latitude in domestic arbitration and for upholding Singapore’s strong judicial policy of promoting and facilitating arbitration. |
| Ling Kong Henry v Tanglin Club | High Court | Yes | [2018] 5 SLR 871 | Singapore | Cited as an example of a case where the High Court has not often found “sufficient reason” to refuse to stay the court proceedings in favour of arbitration. |
| Takenaka Corp v Tam Chee Chong and another | High Court | Yes | [2018] SGHC 51 | Singapore | Cited as an example of a case where the High Court has not often found “sufficient reason” to refuse to stay the court proceedings in favour of arbitration. |
| Fasi Paul Frank v Speciality Laboratories Asia Pte Ltd | High Court | Yes | [1999] 1 SLR(R) 1138 | Singapore | Cited for the principle that the term “sufficient reason” captures a broad range of factors. |
| Sim Chay Koon v NTUC Income Insurance Co-operative Ltd | High Court | Yes | [2016] 2 SLR 871 | Singapore | Cited for the principle that the factors invoked will be weighed against and will have to be found to outweigh the significant consideration that the parties had voluntarily bound themselves to arbitrate and ought therefore to be held to their agreement. |
| Car & Cars Pte Ltd v Volkswagen AG and another | High Court | Yes | [2010] 1 SLR 625 | Singapore | Cited for the principle that while the fact of a multiplicity of proceedings is an important factor, it will not necessarily be a decisive ground upon which the court will refuse a stay of proceedings. |
| Beh Chew Boo v Public Prosecutor | Court of Appeal | Yes | [2021] 2 SLR 180 | Singapore | Cited for the principle that the law discourages the relitigation of the same issues except by means of an appeal. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Arbitration Act (Cap 10, 2002 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Arbitration Agreement
- Stay of Proceedings
- Tiered Arbitration Agreement
- Sufficient Reason
- Multiplicity of Proceedings
- Inconsistent Findings
- Case Management Stay
- Financial Statements
- Audit
- Auditor's Duty of Care
15.2 Keywords
- arbitration
- stay of proceedings
- auditor
- financial statements
- negligence
- breach of contract
16. Subjects
- Arbitration
- Stay of Court Proceedings
- Auditor Liability
17. Areas of Law
- Arbitration Law
- Civil Procedure
- Contract Law
- Auditing Law