Luxor Holdings Sdn Bhd v Sqa Builders Sdn Bhd (B-02(C)(A)-2395-12/2022)

ANTARA LUXOR HOLDINGS SDN BHD …PERAYU-PERAYU

LUXOR YRM SDN BHD DAN SQA BUILDERS SDN BHD …RESPONDEN DALAM PERKARA MAHKAMAH TINGGI MALAYA DI SHAH ALAM DALAM NEGERI SELANGOR DARUL EHSAN, MALAYSIA SAMAN PEMULA NO: BA-24C(ARB)-09-09/2021 Dalam perkara berkenaan timbang tara antara Luxor Holdings Sdn Bhd dan SQA Builders Sdn Bhd; Dan Dalam perkara berkenaan timbang tara antara Luxor YRM Sdn Bhd dan SQA Builders Sdn Bhd; Dan Dalam perkara berkenaan timbang tara di hadapan Dato’ Ar. Woo Thin Fook Kevin; Dan Dalam perkara Awad Muktamad yang dikeluarkan pada 30 Julai 2021 oleh Dato’ Ar. Woo Thin Fook Kevin; Dan 26/03/2025 10:19:22 Kand. 71 Luxor Holdings v SQA Builders 2 Dalam perkara seksyen 42 Akta Timbang Tara 2005; Dan Dalam perkara aturan 69 kaedah 6, Kaedah-Kaedah Mahkamah 2012.

ANTARA LUXOR HOLDINGS SDN BHD …PEMOHON-PEMOHON

LUXOR YRM SDN BHD DAN SQA BUILDERS SDN BHD …DEFENDAN-DEFENDAN CORAM HAJAH AZIZAH HAJI NAWAWI JCA CHE MOHD RUZIMA GHAZALI JCA AZIZUL AZMI BIN ADNAN JCA 5 JUDGMENT OF THE COURT INTRODUCTION [1] Section 42 of the Arbitration Act 2005 conferred upon a party to arbitration proceedings the right to refer to the High Court a question of law 10 arising out of an arbitral award. Section 42 was repealed by the Arbitration (Amendment) (No. 2) Act 2018, which took effect from 8 May 2018. The effect of the repeal meant that questions of law arising from an arbitral award could no longer be referred to the High Court, leaving section 37 as the only means by which an aggrieved party may challenge an arbitral award. 15 Luxor Holdings v SQA Builders 3 [2] There have been conflicting cases at the High Court on the precise effect of the repeal of section 42. In these grounds of judgment, we explain that a question of law arising out of an arbitral award may only be referred to the High Court if the award had been published prior to 8 May 2018. The Parties 5 [3] Luxor Holdings Sdn Bhd and Luxor YRM Sdn Bhd were the employers under construction contracts awarded to SQA Builders Sdn Bhd, a contractor. There were two separate letters of award, one issued by Luxor Holdings Sdn Bhd for the construction of offices on Lot 1 and the other by Luxor YRM Sdn Bhd for Lots 2 and 3, both relating to a development located in a technology park in Kota 10 Damansara. Both letters of award incorporated the Agreement and Conditions of PAM Contract 2006 (Without Quantities), clause 34 of which contained an arbitration agreement. Adjudication [4] Disputes arose. SQA Builders referred the disputes to adjudication 15

SQA Builders filed an application at the High Court to enforce the 10 arbitral award pursuant to section 38 of the Arbitration Act 2005. This originating summons are referred to here as “OS 8”;

Luxor Holdings and Luxor YRM commenced an originating summons to refer ten questions of law to the court, pursuant to section 42(1) of the Arbitration Act 2005 (“OS 9”). OS 9 was subsequently amended: 15 seven of the ten questions of law were amended and an additional question added;

Luxor Holdings and Luxor YRM commenced an action to set aside the arbitral award, pursuant to section 37 of the Arbitration Act 2005 (“OS 10”);

SQA Builders filed an application to tax the costs of the arbitration proceedings pursuant to section 44 of the Arbitration Act 2005 (“OS 14”). Luxor Holdings v SQA Builders 5 [9] These four proceedings were heard together. The learned High Court judge hearing the matters issued a single set of grounds of judgement. [10] There were five appeals before the Court of Appeal:

in Appeal No. 2354, SQA Builders appealed against the decision of the High Court in OS 8 to allow only part of its application to enforce the 5 final arbitral award and the two adjudication decisions;

in Appeal No. 2394, Luxor Holdings and Luxor YRM appealed against the decision of the High Court in OS 8 allowing in part the application by SQA Builders to (among others) to enforce the final arbitral award;

in Appeal No. 2395, Luxor Holdings and Luxor YRM appealed against 10 the decision of the High Court in OS 9. The High Court had found (among others) that the questions of law posed did not fulfil the threshold requirements under subsections 42(1) and 42(1A). Accordingly, the High Court held that there arose no necessity for the questions of law to be addressed;

in Appeal No. 2396, Luxor Holdings and Luxor YRM appealed against the decision of the High Court in OS 10 to dismiss its application to set aside the arbitral award; and

in Appeal No. 2413, Luxor Holdings and Luxor YRM appealed against the decision of the High Court in OS 14, where SQA Builders had 20 applied to tax the costs of the arbitration. [11] For the present purposes, both Luxor Holdings and Luxor YRM are referred to collectively as “Luxor”. Luxor Holdings v SQA Builders 6 Our Decision [12] On 12 September 2024, having considered the able submissions of counsel in the five appeals before us, we dismissed Luxor’s appeals in Appeal Nos. 2394, 2395 and 2396 and 2413. We also substantively dismissed SQA Builder’s appeal in Appeal No. 2354. 5 [13] Luxor applied to the Federal Court for leave to appeal against our decisions in Appeals Nos. 2394, 2395 and 2396. Leave was refused on 28 January 2025. [14] These grounds record our reasons for dismissing the appeal in Appeal No. 2395 (which related to the application in OS 9 to refer 11 questions of law to the 10 court under section 42 of the Arbitration Act 2005). ANALYSIS The Preliminary Objection at the High Court [15] SQA Builders had raised a preliminary objection before the High Court in OS 9, arguing that the repeal of section 42 of the Arbitration Act 2005 by the 15 Arbitration (Amendment) (No. 2) Act 2018 with effect from 8 May 2018 rendered the originating summons incompetent. There was no dispute between the parties that the effect of the repeal meant that questions of law arising from an arbitral award could no longer be referred to the High Court, leaving section 37 as the only means by which an aggrieved party may challenge an arbitral 20 award. The question was, could Luxor nonetheless avail itself of section 42 because it had issued the notices of arbitration before 8 May 2018, or was it barred from doing so because the award was only published in 2021? Luxor Holdings v SQA Builders 7 [16] There are two distinct lines of High Court authorities regarding the precise manner in which the repeal of section 42 took effect. On the one hand is the decision of the High Court in Mammoth Empire Construction v Kenwise [2020] MLJU 1473, which held that for as long as the notice for arbitration was issued and received before the repeal of section 42, parties to the arbitration 5 agreement may refer questions of law arising from the subsequent arbitral award even though the award may have been published after 8 May 2018. This was on the basis that the Arbitration (Amendment) (No. 2) Act 2018 did not expressly provide for the repeal of section 42 to take retrospective effect, and accordingly that the rule of statutory interpretation in section 30(1)(b) of the 10 Interpretation Acts 1948 and 1963 would require the courts to construe the repeal of section 42 in a manner that would not take away the vested rights of parties to a prior arbitration agreement. [17] By contrast, cases such as AMDAC v BYD Auto Industry [2020] 6 CLJ 625, Tokio Marine Insurans v Hi-Poly Industries [2020] MLJU 1446 and Johawaki 15 Development v Majlis Agama Islam Wilayah Persekutuan [2020] MLJU 660 have held that the intention of parliament was to preclude any referral of questions of law in respect of arbitral awards made after the repeal of section 42. [18] In OS 9, the contracts containing the arbitration agreements were entered into between the parties on 27 November 2012, well before the repeal of section 20

The notices for arbitration were issued by Luxor on 26 September 2017, also before the repeal. However, the arbitrator issued his award only on 30 July 2021. [19] The High Court dismissed the preliminary objection raised by SQA Builders. The dismissal of the preliminary objection raised by SQA Builders was not made the subject matter of its appeal. The question thus arose whether 25 effect of the repeal of section 42 of the Arbitration Act 2005 was in issue before Luxor Holdings v SQA Builders 8 the Court of Appeal, and whether we may make a determination on the effect of the repeal. Whether this Court can Consider the Effect of the Repeal of section 42 [20] As a general rule, points of law entitling the party raising them to judgment must be made at trial, and if they are not then made, they cannot be 5 raised at the appeal stage: Banbury v Bank of Montreal [1918] AC 626 (HL). The courts nonetheless have an untrammelled discretion to allow a question of law to be raised for the first time on appeal, as an exception to this general rule. [21] Where the point of law relates to jurisdiction or illegality, the court is bound to consider that contention of lack of jurisdiction or illegality (see, for 10 example, the decision of the Privy Council in Keng Soon Finance v MK Retnam Holdings [1989] 1 CLJ 897). In other cases, the court may allow a new point of law to be raised by the parties for the first time before it where the interest of justice so require: Pengusaha, Tempat Tahanan Perlindungan Kamunting, Taiping v Badrul Zaman bin PS Md Zakariah [2018] 12 MLJ 49 (FC). In the case of 15 Mentari Sekitar v Heritage Property [2016] 3 CLJ 382 (CA), the Court of Appeal, after stating the general rule of pleadings in our adversarial system of justice, held as follows: Thus, the two clear exceptions to the strict rule are illegality and jurisdiction. The rest, it would appear, depends on where the balance of justice lies. 20 [22] The question of whether the interests of justice are met depends on the peculiar facts of each case: Luggage Distributors v Tan Hor Teng [1995] 3 CLJ 520 (CA). The categories of cases are not closed: Luggage Distributors, ibid. A party seeking to raise a new point of law in appeal must first seek leave of the Court of Appeal if that new point has not been set out in the memorandum of appeal: 25 rule 18(2) of the Rules of the Court of Appeal. However, the Court of Appeal, in Luxor Holdings v SQA Builders 9 coming to its decision, is not limited to the grounds set forth in the memorandum of appeal. [23] In the present case, the issue of the effect of the repeal of section 42 of the Arbitration Act 2005 struck to the heart of the issue of the jurisdiction of the High Court to hear OS9. For this reason, we considered that, following Keng Soon 5 Finance v MK Retnam Holdings and Mentari Sekitar v Heritage Property, we were bound to consider the question of the precise effect of the repeal of section 42. This was despite the fact that the ruling by the court below to dismiss SQA Builders’ preliminary objection had not been made the subject of its appeal. Our Decision 10 [24] Section 42(1) conferred upon a party the right to refer to the High Court a question of law arising out of an award, which presupposes that an award is in existence. Thus this right can only be said to have accrued or been acquired by a party once the award has been published. In our judgment, for as long as an arbitral award had not yet been published, the right of a party to avail itself of 15 the provisions of section 42 was merely an inchoate right that cannot yet be exercised. It was a right that was contingent upon the award being published, and cannot be said to be an acquired or accrued right within the meaning of section 30(1)(b) of the Interpretation Acts 1948 and 1967. For this reason, we were of the view that a question of law may only be referred to the High Court 20 if the award in question had been published prior to 8 May 2018, being the date of the repeal of section 42. [25] The effect of amendments to laws must be construed in accordance with section 30(1) of the Interpretation Acts 1948 and 1967, which among others Luxor Holdings v SQA Builders 10 preserves rights and privileges accrued or acquired under the repealed provisions. Section 30(1) provides as follows: Section 30. Matters not affected by repeal.

The repeal of a written law in whole or in part shall not—

affect the previous operation of the repealed law or anything duly done or 5 suffered thereunder; or

affect any right, privilege, obligation or liability acquired, accrued or incurred under the repealed law; or

affect any penalty, forfeiture or punishment incurred in respect of any offence committed under the repealed law; or 10

affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed, as if the repealing law had not been made. 15 [26] It is important to appreciate that section 30 does not limit the powers of parliament to enact laws with retrospective effect. Indeed, as we shall see, the issue of retrospectivity does not arise at all in this case. Section 30 merely provides guidance on how provisions of law providing for the repeal of other laws are to be read and construed. 20 [27] The second preliminary observation that may be made is that the use of the word “affect” in subparagraph (b) must be read to mean “adversely affect” in as far as it pertains to any right or privilege conferred under the repealed law. This means that, if an amending law provides for additional rights or privileges over and above that provided under the repealed law, the amending law 25 remains unaffected by section 30(1)(b). This, in our view, must be the intent of parliament by necessary implication. [28] The material portion of section 30(1) is as follows: Luxor Holdings v SQA Builders 11

The repeal of a written law in whole or in part shall not— …

affect any right, privilege, obligation or liability acquired, accrued or incurred under the repealed law; or [Emphasis added] 5 [29] Thus any provision of law providing for the repeal of any other written law must be construed, in the absence of any express provisions to the contrary, in a manner so that the repeal does not adversely affect any right or privilege that has accrued or has been acquired under the repealed law. [30] Section 12 of the Arbitration (Amendment) (No. 2) Act 2018 provides 10 simply: The principal Act is amended by deleting section 42. [31] Clearly, the draftsperson did not anticipate the problems of interpretation and construction that have subsequently arisen from this simple (or perhaps simplistic) sentence. It would have been a fairly unburdensome task to have 15 included a saving provision to clarify, for example, that the repeal did not affect arbitral proceedings in respect of which an award was delivered prior to the date of repeal. [32] For better or for worse, the much needed clarity was not provided, and the precise effect of section 12 of the Arbitration (Amendment) (No. 2) Act 2018 20 was left to be construed in accordance with section 30(1) of the Interpretation Acts 1948 and 1967. [33] As explained, there have been two distinct lines of authority emerging from the High Court: one where the courts have held that for as long as the Luxor Holdings v SQA Builders 12 notice for arbitration was issued and received before the repeal of section 42, parties to the arbitration agreement may refer questions of law arising from the subsequent arbitral award to the High Court even though the award may have been published after 8 May 2018. In the other, the courts have held that the intention of parliament was to preclude any referral of questions of law in 5 respect of arbitral awards made after the repeal of section 42 (regardless of whether notices for arbitration may have been issued and received prior to the repeal). [34] In the present case, the learned judge followed the former line of authority, and held to the effect that for as long as a notice to arbitrate had been 10 issued, it conferred upon the parties to an arbitration agreement a right under section 42. The grounds of judgment of the court below stated as follows:

In view of Tokio Marine Insurans, Pembinaan Limbongan Setia and Johawaki Development, I have reconsidered Mammoth Empire Construction. With respect, I maintain my opinion in Mammoth Empire Construction. My reasons 15 are as follows:

AMDAC, Tokio Marine Insurans, Pembinaan Limbongan Setia and Johawaki Development did not consider the effect of s 23 AA. By virtue of ss 23 and 42 AA read with s 30(1)(b) and (d) IA, when SQA received the 2 Notices To Arbitrate (26.9.2017), LH and LY already had a vested "right" 20 and/or "remedy' under s 42 AA to refer questions of law to the High Court which might subsequently arise from the Award [Vested Right/Remedy (Receipt of Notice to Arbitrate)];

if I have followed AMDAC, Tokio Marine Insurans, Pembinaan Limbongan Setia and Johawaki Development, this is not only contrary to s 23 AA read 25 with s 30(1)(b) and (d) IA but will also render redundant the Vested Right/Remedy (Receipt of Notice to Arbitrate). Furthermore, the effect of AMDAC, Tokio Marine Insurans, Pembinaan Limbongan Setia and Johawaki Development is to confer retrospective effect on Act A1569, namely, Act A1569 applies to all arbitral proceedings which have been 30 commenced before 8.5.2018 and the awards have yet to be delivered on 8,5.2018;

as explained in Mammoth Empire Construction, if the legislature had intended for the repeal of s 42 AA in Act A1569 to apply retroactively to Luxor Holdings v SQA Builders 13 all arbitrations which had been commenced before 8.5.2018 but the awards had not been delivered on 8.5.2018, the legislature could have easily stated as such in Act A1569. Parliament however did not provide as such in Act A1569; and

the wording in s 42(1) AA (Any party may refer to the High Court any 5 question of law arising out of an award") merely concerns when a party may refer to the High Court questions of law which arises out of an award. The words in s 42(1) AA cannot support a statutory interpretation that Parliament has intended for Act A1569 to apply retrospectively to all arbitral proceedings which had been commenced before 8.5.2018 but 10 the awards had not been delivered on 8.5.2021.

Premised on the reasons expressed in the above paragraph 23, I am constrained to dismiss SQA's PO (OS No. 9) with costs. [35] Section 23 of the Arbitration Act 2005, which appears to be central to the reasoning adopted by the High Court, provides as follows: 15 23 Commencement of arbitral proceedings Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute shall commence on the date on which a request in writing for that dispute to be referred to arbitration is received by the respondent. [36] It will be apposite to begin the analysis by examining the precise wording 20 of section 42(1) of the Arbitration Act 2005: 42 Reference on questions of law

Any party may refer to the High Court any question of law arising out of an award. [37] Section 42(1) conferred upon a party the right to refer to the High Court a 25 question of law arising out of an award, which presupposes that an award is in existence. Thus this right can only be said to have accrued or been acquired by a party once the award has been published. In our judgment, for as long as an arbitral award had not yet been published, the right of a party to avail itself of the provisions of section 42 was merely an inchoate right that cannot yet be 30 exercised. It was a right that was contingent upon the award being published, Luxor Holdings v SQA Builders 14 and cannot be said to be an acquired or accrued right within the meaning of section 30(1)(b) of the Interpretation Acts 1948 and 1967. [38] In order to ascertain whether the right of a party to an arbitration agreement to refer a question of law has accrued or been acquired by the party, we need only ask the following question: Could the party have referred a 5 question of law prior to the publication of the award? Clearly it could not, because no award had been published yet, and thus there could not be said to exist any question that arose from the award. If it could not, then clearly it was not possessed of any right to do so at the material time, and hence section 30(1)(b) has no application in the circumstances. For this reason, we were of the 10 view that a question of law may only be referred to the High Court if the arbitral award had been published prior to 8 May 2018, being the date of the repeal of section 42. [39] Section 23 merely provides for the commencement of arbitral proceedings, which is when the notice of the referral of the dispute to arbitration 15 sent by one party has been received by the opposing party. We do not see how section 23 would affect our analysis in the preceding paragraphs. [40] We would add for completeness that the issue of retrospectivity does not arise in this case, because the repeal was not expressed to take effect retrospectively. A piece of legislation can always take retrospective effect if 20 there was an express provision to this effect, as parliament possesses plenary powers of legislation, and is competent to legislate with retrospective effect, subject to any restriction in the Federal Constitution (see Loh Kooi Choon v Government of Malaysia [1977] 2 MLJ 187). Luxor Holdings v SQA Builders 15 [41] The Arbitration (Amendment) (No. 2) Act 2018 was gazetted on 4 May 2018 and took effect from 8 May 2018. It was not expressed to take effect retrospectively. The removal of the ability of parties to an arbitration agreement to refer to the High Court a question of law arising from an arbitral award took effect prospectively. 5 [42] The issues addressed in this judgment was concerned primarily with the proper construction of section 12 of Arbitration (Amendment) (No. 2) Act 2018 in light of section 30(1)(b) of the Interpretation Acts 1948 and 1967. As we had dismissed the appeal on a jurisdictional point, we did not consider it necessary for the eleven questions of law to be specifically addressed, except to observe 10 the following. The Eleven Questions of Law [43] If we had come to the conclusion that, because the decision of the High Court on the preliminary objection had not been made the subject of SQA Builders’ appeal, it would not be just for the question to be considered on 15 appeal, we would have allowed Luxor’s appeal in Appeal No 2395 and remitted the case back to the High Court for OS 9 to be reheard. This was because the High Court had not addressed the amended questions of law posed in OS 9, but had instead considered and answered the original, unamended questions. We observe that this was the precise remedy being sought by Luxor in their appeal. 20 Had we exercised the power to remit the whole case back to the High Court, we would have set aside the whole of the judgment of the High Court in OS 9, which in turn would have revived the question of law regarding the effect of the repeal of section 42. This would have brought the parties to precisely the same position they were in this appeal. 25 Luxor Holdings v SQA Builders 16 [44] For the reasons explained in this judgment, we dismissed Luxor’s appeal in Appeal No 2395 with costs of RM25,000, such costs to be subject to an allocatur. 26 March 2025 5 Azizul Azmi Adnan Judge of the Court of Appeal For the appellants: Dato’ Abd Shukor Ahmad, Mr Ee Kim Hau & Mr Thiong Chee Whei—Messrs K.H. Ee & Partners For the respondent: Dato’ Ringo Low, Mr Lam Wai Loon, Ms Choy Chi Peng & Mr Lim Ren Wei—Harold & Lam Partnership 10