Carona Holdings v Go Go Delicacy: Stay of Proceedings & Arbitration Act Interpretation

In Carona Holdings Pte Ltd and Others v Go Go Delicacy Pte Ltd, the Singapore Court of Appeal considered whether a plaintiff is entitled to a default judgment when the defendant fails to file a defense while awaiting the outcome of a stay application based on a pre-existing arbitration agreement. Go Go Delicacy Pte Ltd sued Carona Holdings Pte Ltd and others for breaches of a franchise agreement. The Appellants applied for a stay of proceedings under the Arbitration Act, but did not file a defense. The Respondent obtained a default judgment. The Court of Appeal allowed the appeal, holding that the Appellants had diligently pursued their stay application and a default judgment should not have been entered given the factual controversies.

1. Case Overview

1.1 Court

Court of Appeal

1.2 Outcome

Appeal Allowed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

The Court of Appeal addressed whether a defendant must file a defense or seek an extension pending a stay application for arbitration.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Carona Holdings Pte LtdAppellantCorporationAppeal AllowedWon
Carona Fast Food Pte LtdAppellantCorporationAppeal AllowedWon
Foodplex Trading Pte LtdAppellantCorporationAppeal AllowedWon
Yap Teck SongAppellantIndividualAppeal AllowedWon
Lee Boon HiokAppellantIndividualAppeal AllowedWon
Go Go Delicacy Pte LtdRespondentCorporationDefault Judgment Set AsideLost
Alfred Dodwell of Alfred Dodwell

3. Judges

Judge NameTitleDelivered Judgment
Andrew Phang Boon LeongJustice of the Court of AppealNo
V K RajahJustice of the Court of AppealYes

4. Counsels

Counsel NameOrganization
Adrian TanDrew and Napier LLC
Lim Sing YunDrew and Napier LLC
Alfred DodwellAlfred Dodwell
Ang Cheng HockAllen and Gledhill LLP
Tham Wei ChernAllen and Gledhill LLP

4. Facts

  1. Carona Holdings and Go Go Delicacy entered into an exclusive franchise agreement.
  2. The agreement included a clause stipulating that disputes would be resolved by arbitration.
  3. Go Go Delicacy alleged that Carona Holdings failed to provide adequate training.
  4. Go Go Delicacy claimed to have been misled into purchasing unnecessary items.
  5. Go Go Delicacy commenced proceedings against Carona Holdings and others.
  6. Carona Holdings applied for a stay of proceedings under the Arbitration Act.
  7. Carona Holdings declined to file a defence pending the stay application.

5. Formal Citations

  1. Carona Holdings Pte Ltd and Others v Go Go Delicacy Pte Ltd, CA 90/2007, [2008] SGCA 34

6. Timeline

DateEvent
Respondent commenced proceedings against the Appellants
Appellants were served the writ of summons
Appellants entered appearance
Respondent's counsel hoped Appellants would waive arbitration clause
Appellants applied to stay the proceedings
Stay application fixed for hearing
Respondent gave 48 hours’ notice to file defence
Appellants replied that 48-hour notice was inappropriate
Respondent filed inter partes application for judgment in default of defence
Hearing for default judgment and stay application
Decision Date

7. Legal Issues

  1. Stay of Court Proceedings Pending Arbitration
    • Outcome: The Court of Appeal held that the Appellants had diligently pursued their stay application and a default judgment should not have been entered.
    • Category: Procedural
    • Sub-Issues:
      • Whether application for extension of time would constitute 'step in the proceedings'
      • Whether defendant could be compelled to file defence notwithstanding pending stay application
  2. Interpretation of 'Step in the Proceedings' under Arbitration Act
    • Outcome: The court clarified that an application for an extension of time to file a defence does not automatically constitute a 'step in the proceedings' that would waive the right to arbitration.
    • Category: Substantive

8. Remedies Sought

  1. Monetary Damages

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Arbitration
  • Commercial Litigation

11. Industries

  • Food and Beverage

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Go Go Delicacy Pte Ltd v Carona Holdings Pte LtdHigh CourtYes[2008] 1 SLR 161SingaporeCited for the Judge's observations on the appropriateness of a stay of proceedings and the non-binding nature of an arbitration clause on non-signatories.
Samsung Corp v Chinese Chamber Realty Pte LtdCourt of AppealYes[2004] 1 SLR 382SingaporeDiscussed in relation to the proper procedure when a stay application is pending and whether a compromise order requiring the filing of a defence is appropriate.
Australian Timber Products Pte Ltd v Koh Brothers Building & Civil Engineering Contractor (Pte) LtdHigh CourtYes[2005] 1 SLR 168SingaporeDiscussed in relation to whether a pending stay application prevents time from running for the service of the defence and the need for a defendant to be proactive.
Lai Swee Lin Linda v AGCourt of AppealYes[2006] 2 SLR 565SingaporeCited for the principle that the rules of civil procedure should not be applied in a way that produces unnecessary technicality or substantive injustice.
Yeoh Poh San v Won Siok WanHigh CourtYes[2002] 4 SLR 91SingaporeCited for the principle that compromise orders are not desirable and that a defendant should not be required to meet the merits of the plaintiff’s claim while seeking a stay.
The Jarguh SawitCourt of AppealYes[1998] 1 SLR 648SingaporeCited for the principle that the question of jurisdiction is logically prior to the substantive dispute of the parties.
Ives & Barker v WillansCourt of AppealYes[1894] 2 Ch 478England and WalesCited for the definition of a 'step in the proceedings' as something in the nature of an application to the court.
Zalinoff v HammondHigh CourtYes[1898] 2 Ch 92England and WalesCited for the definition of a 'step in the proceedings' as a substantive step taken by a party.
The County Theatres and Hotels, Limited v KnowlesKing's Bench DivisionYes[1902] 1 KB 480England and WalesCited for the definition of a 'step in the proceedings' as something in the nature of an application to the Court.
Lane v HermanCourt of AppealYes[1939] 3 All ER 353England and WalesCited for the definition of a 'step in the proceedings' as a step taken in the proceedings in the technical sense.
Austin and Whiteley Limited v S Bowley and SonNot AvailableYes(1913) 108 LT 921England and WalesCited for the definition of a 'step in the proceedings' as some step which indicates an intention on the part of a party to the proceedings that he desires that the action should proceed and has no desire that the matter should be referred to arbitration.
Roussel-Uclaf v G D Searle & Co Ltd and G D Searle & CoNot AvailableYes[1978] 1 Lloyd’s Rep 225England and WalesCited for the principle that the statute is contemplating some positive act by way of offence on the part of the defendant rather than merely parrying a blow by the plaintiff.
Eagle Star Insurance Co Ltd v Yuval Insurance Co LtdNot AvailableYes[1978] 1 Lloyd’s Rep 357England and WalesCited for the principle that a step in the proceedings is an act which impliedly affirms the correctness of the court proceedings and the willingness of the defendant to go along with a determination by the Courts of law instead of arbitration.
Blue Flame Mechanical Services Limited v David Lord Engineering LimitedNot AvailableYes(1992) 8 Const LJ 266England and WalesCited for the summary of what a 'step' in the proceedings refers to: a significant procedural act done with the intention of electing to litigate rather than stand on the right to arbitrate.
Pitchers, Ltd v Plaza (Queensbury), LtdNot AvailableYes[1940] 1 All ER 151England and WalesCited as an example of acts that are steps in the proceedings, such as seeking leave to defend or to strike out.
Richardson v Le MaitreNot AvailableYes[1903] 2 Ch 222England and WalesCited as an example of acts that are steps in the proceedings, such as attending a summons for directions.
Ochs v Ochs BrothersNot AvailableYes[1909] 2 Ch 121England and WalesCited as an example of acts that are steps in the proceedings, such as attending a summons for directions.
Parker, Gaines & Co, Limited v TurpinNot AvailableYes[1918] 1 KB 358England and WalesCited as an example of acts that are steps in the proceedings, such as requiring disclosure of documents.
London Central and Suburban Developments Ltd v Gary BangerNot AvailableYes[1999] ADRLJ 119England and WalesCited as an example of an act that is a step in the proceedings, such as writing a letter entitled 'Defence' to the court and the claimant’s solicitors.
Patel v PatelCourt of AppealYes[2000] QB 551England and WalesCited for the principle that an act which would otherwise be regarded as a step in the proceedings would not be treated as such if the applicant had specifically stated that he intended to seek a stay.
Capital Trust Investments Ltd v Radio Design TJ ABCourt of AppealYes[2002] 2 All ER 159England and WalesCited for the principle that an application for summary judgment did not amount to taking a 'step' because it did not express the willingness of the defendant to go along with a determination of the courts instead of arbitration.
Global Multimedia International Ltd v Ara Media ServicesNot AvailableYes[2007] 1 All ER (Comm) 1160England and WalesCited for the test to be applied in considering if there has been an actual submission to jurisdiction.
Ford’s Hotel Company, Limited v BartlettHouse of LordsYes[1896] AC 1England and WalesDiscussed in relation to whether applying for an extension of time ought to be regarded as taking a step in the proceedings.
Bartlett v Ford’s House CompanyCourt of AppealYes[1895] 1 QB 850England and WalesDiscussed in relation to whether applying for an extension of time ought to be regarded as taking a step in the proceedings.
London Sack & Bag Co Ltd v Dixon & Lugton, LtdNot AvailableYes[1943] 2 All ER 763England and WalesCited for the principle that if the reason sought for the extension of time was merely to preserve the applicant’s position in the event the application for a stay was refused, the court nevertheless retained its discretion to grant a stay.
Marzell Investment Ltd v Transtelex LtdCourt of AppealYes[1987] CLY 3099England and WalesCited for the principle that the wording of the summons, including the words “or to apply for a stay pending arbitration”, did not in fact alter the character of that summons.
Winning Godown Ltd v Sam Yu Construction CoNot AvailableYes[1987] 1 HKC 366Hong KongCited for the 'acid test' of whether a defendant has done something in the proceedings which shows he is submitting to the court’s jurisdiction rather than an arbitrator’s to try the real issue between the parties.
China Trade Omni Development Centre Ltd v Ramada International IncNot AvailableYes[1989] 1 HKC 417Hong KongCited for the principle that the crux of the issue was whether there was “a willingness to go to law” and an affirmation of the institution of proceedings.
Euro-America Insurance Ltd v Lite Best Co LtdNot AvailableYes[1993] 1 HKC 333Hong KongCited as an example of a case where the defendant filed an affidavit in opposition to the plaintiff’s summons for judgment in default to be entered before issuing a summons for a stay, and the court held that the defendant had taken a step in the action.
Jialing (Hong Kong) Co Ltd v JA Moeller (Hong Kong) LtdNot AvailableYes[1993] 2 HKC 637Hong KongCited for the principle that the court must look at the intention behind the act of filing the affidavit.
Jurumurni Sdn Bhd v PPC Glomac Sdn BhdNot AvailableYes[1999] MLJU 398MalaysiaCited for the principle that making an application for extension of time to file and serve a defence as well as to file an affidavit in reply were acts that amounted to steps in the proceedings.
Sanwell Corp v Trans Resources Corp Sdn BhdFederal CourtYes[2002] 2 MLJ 625MalaysiaCited for examples of what might constitute a “step in the proceedings”.
Malaysian European Production System Sdn Bhd v Zurich Insurance (M) BhdNot AvailableYes[2003] 1 MLJ 304MalaysiaCited for the principle that the court drew a distinction between asking for an extension of time by applying to court and asking by letter for a time extension by consent between parties.
Heistein & Sons v Polson Iron Works LimitedNot AvailableYes(1919) 46 OLR 285CanadaCited for the principle that the request for security and costs was “no merely formal thing” and was, instead, “an intimation that, security being given, the action might proceed”.
The Dufferin Paving Co Ltd v The George A Fuller Co of Canada LtdCourt of AppealYes[1935] OR 21CanadaCited for the principle that the defendant, by stating in its demand for particulars that it required them for the purpose of “drawing its statement of defence”, had “already elected to defend and would defend”.
Raymond v Adrema LimitedNot AvailableYes[1963] 1 OR 305CanadaCited for the principle that all the matters which have been so treated [as “any other steps”] are matters in the general procedure of the action which advance it from the beginning of the action to trial and are developments in the course of putting the action in such a condition that it can be dealt with by the Court.
Fathers of Confederation Buildings Trust v Pigott Construction Co LtdNot AvailableYes(1974) 44 DLR (3d) 265CanadaCited for the principle that where a party made a demand for particulars in order to guide himself as to whether he would allow the action to proceed in court or avail himself of the provisions of the arbitration clause in the pre-existing agreement to apply for a stay of proceedings, such action by him did not constitute a step in the proceedings.
Central Investments & Development Corporation v Miller Associates LtdNot AvailableYes(1982) Nfld & PEIR 35CanadaCited for the principle that the extension of time was “for the purpose of receiving proper instructions in order to prepare and file a statement of defence, due to the complexity of the case and its many issues”.
Republic of Philippines v Maler FoundationCourt of AppealYes[2008] 2 SLR 857SingaporeCited for the principle that a party applying for a stay should not blow hot and cold.
Chong Long Hak Kee Construction Trading Co v IEC Global Pte LtdNot AvailableYes[2003] 4 SLR 499SingaporeCited for the principle that, in the event any steps were made with the express reservation of the pre-existing rights under the arbitration agreement, the defendant’s right to stay the proceedings could be preserved.
SP Chua Pte Ltd v Lee Kim Tah (Pte) LtdNot AvailableYes[1993] 3 SLR 122SingaporeCited for the principle that the English position in reality “draws a distinction between what may be described as an extra judicial act done by the defendant and one by which he invokes the jurisdiction of the court”.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Arbitration Act (Cap 10, 2002 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Arbitration Agreement
  • Stay of Proceedings
  • Step in the Proceedings
  • Default Judgment
  • Franchise Agreement
  • Arbitration Clause

15.2 Keywords

  • Arbitration
  • Stay of Proceedings
  • Default Judgment
  • Singapore
  • Arbitration Act
  • Step in Proceedings

17. Areas of Law

Area NameRelevance Score
Arbitration90
Civil Practice70
Contract Law50

16. Subjects

  • Arbitration
  • Civil Procedure
  • Stay of Proceedings