Axventure Sdn. Bhd. v Ambank (M) Berhad (WA-24C-38-03/2026)

AMBANK (M) BERHAD [Company No.: 196901000166 (8515-D)]

FREEDOM ESTATES SDN BHD [Company No.:199701000850(416346-K)] ...DEFENDANTS GROUNDS OF JUDGMENT A. INTRODUCTION

Before this Court are 2 related applications arising from an ongoing construction dispute which is ultimately to be resolved by arbitration.

The first is the Plaintiff, Axventure Sdn Bhd's ("Axventure") Originating Summons dated 25.3.2026 ("OS"), seeking an injunction to restrain the 1st Defendant, AmBank (M) Berhad ("AmBank"), from paying and the 2nd Defendant, Freedom Estates Sdn Bhd ("FESB"), from receiving the proceeds of a Performance Bond(reference No. T01725IBG1065493) ("Performance Bond").

The second is FESB's Notice of Application dated 15.4.2026("Encl. 32"), seeking to set aside the Ex Parte Injunction Order granted by this Court on 27.3.2026 ("Ex Parte Order") and for the immediate release of the proceeds of the Performance Bond to FESB.

Axventure relies solely on the grounds of unconscionability to restrain the call on the Performance Bond.

The central question is whether, on the cumulative affidavit evidence, Axventure has established a strong prima facie case or at least a seriously arguable case, that FESB's call on the Performance Bond was unconscionable that is, so manifestly unfair, oppressive or lacking in good faith as to prick the conscience of a reasonable and sensible person.

Having considered the affidavits, written submissions and authorities relied upon by the parties, and for the reasons that follow, this Court:

allows FESB's application to set aside the Ex Parte Order;

dismisses Axventure's OS for injunctive relief;

orders that the proceeds of the Performance Bond be released to FESB; and

declines, at this stage, to order an immediate inquiry as to damages.

Axventure has appealed against my decision to set aside the Ex Parte and to dismiss the OS. These are my full grounds for that decision.

The material facts, as disclosed from the affidavits filed by the parties, may be summarised chronologically as follows. By a Letter of Award dated 6.12.2023 ("Contract"), FESB, the developer of a 552-unit residential condominium project at Lot 82332, Mukim Batu, off Jalan Segambut, Kuala Lumpur ("Project"), appointed Axventure as the main contractor to execute and complete the main building works for the contract sum of RM252,000,000.00 ("Contract Sum") under the PAM 2006 Standard Form of Building Contract.

The Project commenced on 3.12.2024. On 23.1.2025, AmBank issued the Performance Bond in favour of FESB in the sum of RM12,600,000.00,representing 5% of the Contract Sum. It is common ground that the Performance Bond is unconditional and payable on demand, notwithstanding any dispute or protest by Axventure.

By June 2025, Axventure was experiencing cash flow difficulties. On 5.6.2025, it requested an advance payment of RM4,000,000.00 under a letter expressly titled "Request for Advance Payment to Accelerate Work."

FESB agreed to the request on 17.7.2025, and the advance was released on 8.8.2025 outside the terms of the Contract. The parties agreed that the advance would be recouped by monthly deductions of RM500,000.00 from progress payments commencing in August 2025.

On 10.11.2025, Axventure requested a 4 month moratorium on the recoupment of the advance payment for the period from November 2025 to February 2026. FESB agreed. Consequently, no deductions were made from IPC Nos. 18 and 19. As at the date of termination, RM2,500,000.00 of the advance remained outstanding.

By November 2025, the Project had fallen into significant delay. On 21.11.2025, the Department of Building Control of Dewan Bandaraya Kuala Lumpur ("DBKL") issued a Stop Work Order ("SWO"), which remained in force until 19.12.2025 after the outstanding compound payments were settled and the relevant CLQ permit and development order issues were resolved.

On 9.12.2025, FESB issued its first Notice of Default ("1st NOD"). A without prejudice meeting was held the following day, during which the parties discussed the possibility of a mutual termination of the Contract.

Following the 1st NOD, Axventure requested a 3-week period on 22.12.2025 to demonstrate recovery under its Mitigation Work Programme (Rev 3C), which FESB agreed to. On 2.1.2026, Axventure submitted a further revised programme ("Rev 3D"), which FESB contends was done without its consent.

On 6.1.2026, the Architect rejected Rev 3D for various reasons. A subsequent site inspection on 9.1.2026 confirmed that the actual progress did not correspond with the milestones proposed by Axventure.

On 19.1.2026, FESB issued its second Notice of Default ("2nd NOD"), citing continued deterioration in the progress of the Project, failure to proceed regularly and diligently under Clause 25.1(c) of the Contract, and persistent non-compliance with the Architect's Instructions under Clause 25.1(d).

FESB further contends that the manpower deployed by Axventure remained substantially below the levels projected in its own recovery programme.

On 11.2.2026, FESB served a notice of termination on Axventure ("Notice of Termination"). It subsequently commenced a tender exercise for a replacement contractor.

On 11.3.2026, Crest Builder Sdn Bhd ("Crest Builder") was awarded the replacement contract at a contract sum approximately RM14,500,000.00 higher than the original Contract Sum, with a completion period of 19 months. Crest Builder commenced work on 25.3.2026.

On 24.3.2026, approximately 6 weeks after the Notice of Termination, FESB called on the Performance Bond.

The following day, Axventure commenced this action against AmBank and FESB. On the strength of its ex parte application, supporting affidavits and certificate of urgency filed on 25.3.2026, this Court granted the Ex Parte Order on 27.3.2026 restraining AmBank from paying, and FESB from receiving, the proceeds of the Performance Bond pending the disposal of the OS.

Although AmBank is named as the 1st Defendant as the issuer of the Performance Bond, it has not entered an appearance, filed any affidavit, or otherwise participated in these proceedings. Its role is confined to that of the issuing bank and, as is customary in cases involving on-demand performance bonds, it abides by the decision of the Court as to whether payment under the Performance Bond should be made.

On the case management fixed on 7.4.2026, Axventure's solicitors mentioned on behalf of AmBank and had indicated that it has taken no position on the merits of the dispute and will abide by the order of this Court in relation to the Performance Bond.

Axventure subsequently commenced arbitration by filing its Notice of Arbitration on 6.4.2026.

Against that factual backdrop, I now turn to the parties' respective contentions

Axventure accepts that the Performance Bond is unconditional and payable on demand. It nevertheless submits that the Court may restrain a beneficiary from calling on such a bond where the call is unconscionable.

Axventure contends that FESB's call on the Performance Bond was the culmination of a course of conduct which, viewed cumulatively, was unconscionable, oppressive, premature and lacking in good faith.

It submits that this establishes a strong prima facie case, or at least a seriously arguable case, of unconscionability within the principles laid down in Sumatec Engineering and Construction Sdn Bhd v Malaysian Refining Company Sdn Bhd [2012] 3 CLJ 401 and applied in Dunggon Jaya Sdn Bhd v Aeropod Sdn Bhd & Anor Appeal [2019] 9 CLJ 734.

Axventure's cumulative case rests on 5 principal contentions or pillars: a) FESB had predetermined to oust Axventure and replace it with Crest Builder before the Notice of Termination was issued, evidenced by site visits by Crest Builder's representatives on 1, 2 & 18.12.2025. b) FESB had financially strangulated Axventure by deliberately constricting it's cash flow through an allegedly arbitrary retrospective deduction of RM841,143.01 in IPC No.19 and the non-issuance of a certificate for Progress Claim No.20 ("PC No.20"). c) the reliance on defaults arising during or around the DBKL's SWO period was oppressive, as the SWO was an external regulatory event beyond Axventure's control; d) the NODs were defective and the termination was wrongful; & e) the call on the Performance Bond immediately following termination was commercially unconscionable and oppressive.

On the setting-aside application, Axventure submits that the Ex Parte Order was a proper preservatory order consistent with Order 29 of the Rules of Court 2012 and Section 11 of the Arbitration Act 2005. It contends that its alleged non-disclosures were not material omission but contested merits disputes properly reserved for arbitration.

Axventure relies on Noor Jahan bt Abdul Wahab v Md Yusoff b Amanshah & Anor [1994] 2 CLJ 249 for the proposition that there is no automatic right to set aside an ex parte order for non-disclosure; the question is whether the non-disclosure is so severe that the court would not have granted the order had full disclosure been made.

It further relies on Salcon Engineering Sdn Bhd v PRM Energy Systems (M) Sdn Bhd [1994] 1 CLJ 295 for the proposition that it is impractical to require every document and every issue to be disclosed at the ex parte stage.

On the balance of justice, Axventure submits that FESB suffers no irreversible prejudice if the bond remains preserved with AmBank, while Axventure would suffer immediate and irreparable commercial prejudice which cannot adequately be compensated by damages if the bond is released before arbitration determines the validity of FESB's termination and demand.

It relies on the approach in Dunggon Jaya (supra) that the court should restrain the beneficiary from receiving the guarantee pending the arbitral tribunal's determination of whether the termination was wrongful.

FESB opposes the OS and supports its own setting-aside application on three principal grounds: fatal non-disclosure, absence of unconscionability, and the balance of convenience.

On non-disclosure, FESB submits that Axventure failed to make full and frank disclosure by omitting 4 categories of material facts: (a) the RM4,000,000.00 advance payment and the 4-month recoupment moratorium during the precise period of alleged financial strangulation; (b) Letters of Undertaking issued by FESB to 4 of Axventure's key suppliers totalling RM4,650,970.29 in aggregate exposure; (c) the without prejudice character of the 10.12.2025 meeting and the mutual termination discussions therein; and (d) Axventure's own delay and continuing defaults as the documented basis for the NODs.

FESB relies on Gumusut-Kakap Semi Floating Production System (L) Ltd v Sabah Shell Petroleum Co Ltd [2017] MLJU 877 and Creative Furnishing Sdn Bhd v Wong Koi [1989] 2 MLJ 153 for the proposition that material non-disclosure is fatal to the ex parte order.

On the issue of unconscionability, FESB submits that Axventure cannot rely on disputed factual allegations as constituting unconscionability while at the same time contending that those disputes should be left for determination in arbitration.

According to FESB, disputed allegations, without more, cannot cumulatively establish unconscionability. FESB further distinguishes Dunggon Jaya (supra) on the facts, submitting that unlike the employer in that case, it had consistently extended financial assistance to Axventure throughout the Project and had not engineered the circumstances leading to the bond call.

On the balance of convenience, FESB relies on the Federal Court decision in Esso Petroleum Malaysia Inc v Kago Petroleum Sdn Bhd [1995] 1 MLJ 149 for the proposition that the balance of convenience in respect of unconditional bonds generally tips heavily against the grant of an injunction.

FESB further submits that it faces quantifiable and compounding ongoing losses: Schedule H liquidated ascertained damages under the Housing Development (Control and Licensing) Act 1966 at RM105,000.00 per day on 552 sold residential units, a replacement contract premium of RM14,500,000.00, outstanding advance payment recoupment of RM2,500,000.00, and vendor claims under Letters of Undertaking of RM4,650,970.29.

FESB further contends that Axventure's cross-undertaking as to damages provides little real security, given Axventure's admitted cash flow difficulties and the evidence relating to the balance in its account with AmBank.

The applicable legal principles are well-settled and are common ground between the parties.

An on-demand performance bond is autonomous and independent of the underlying contract. Payment must generally be made upon a valid demand notwithstanding any dispute under the underlying contract.

The Federal Court affirmed this principle in Sumatec Engineering (supra), endorsing the passage from Kerr J in Harbottle (Mercantile) v National Westminster Bank Ltd [1978] 1 QB 146 that on-demand obligations assumed by banks "are the life-blood of international commerce" and that except in exceptional cases, courts will leave merchants to settle their disputes by litigation or arbitration without interfering with banking obligations.

The Court nevertheless retains jurisdiction to restrain a beneficiary from calling on or receiving proceeds under a performance bond where the call is tainted by fraud or unconscionability. These are recognised as two distinct and independent grounds. In the present case, Axventure relies solely on unconscionability.

The threshold for unconscionability is high. It requires "manifest or strong evidence" of the alleged unconscionable conduct not bare assertion or contractual dissatisfaction.

The applicant must satisfy the court that there is a seriously arguable case, amounting to a strong prima facie case, that the only realistic inference from the totality of the circumstances is that the beneficiary's conduct was so manifestly unfair, oppressive or lacking in good faith as to prick the conscience of a reasonable and sensible man. This formulation, drawn from Sumatec (supra), was applied by the Court of Appeal in Dunggon Jaya (supra) and again in Pengerang Refining Company Sdn Bhd v Sinopec Engineering (Group) Co Ltd & Anor [2025] CLJU 3373.

Unconscionability is assessed cumulatively and not by isolating each component of the alleged conduct and asking whether each individual element alone suffices. As the Court of Appeal held in Dunggon Jaya (supra), the court must examine the totality of the circumstances.

The requirement that the court assess the allegations cumulatively does not mean that ordinary contractual disputes, without more, may simply be aggregated into a finding of unconscionability. The court must examine the contemporaneous evidence as a whole to determine whether the requisite threshold has been met.

On the balance of convenience, the Federal Court in Esso Petroleum (supra) held that the balance of convenience in cases involving unconditional performance bonds generally tips heavily against the grant of an injunction, recognising the commercial importance of on-demand obligations. The availability of arbitral remedies is a relevant factor.

The first question is whether the Ex Parte Order of 27.3.2026 should be set aside for material non-disclosure. The duty of full and frank disclosure at the ex parte stage is not in dispute.

In Creative Furnishing (supra), the court held that the duty extends to matters adverse to the applicant's case. In Gumusut-Kakap (supra), it was held that every material representation must not be misleading and there must not be any suppression of material facts; failure to comply at the ex parte stage may be fatal.

However, as Axventure correctly submits, the duty of full and frank disclosure does not require an ex parte applicant to anticipate and plead the respondent's entire future affidavit in advance.

In Salcon Engineering (supra), the court held that it is impractical to require virtually every document and every issue between the parties to be disclosed at the ex parte stage.

More significantly, in Noor Jahan (supra), the court held that there is no absolute right to have an ex parte order set aside merely because non-disclosure is alleged. The question is whether the non-disclosure is so severe that, had there been full disclosure, the court would not have granted the injunction.

This Court accordingly applies the Noor Jahan (supra) test to each of FESB's alleged non-disclosures.

The most serious non-disclosure relates to the RM4,000,000.00 advance payment and the 4-month recoupment moratorium. Axventure's primary ground of unconscionability at the ex parte stage was financial strangulation that FESB had deliberately suppressed its cash flow through certification and payment conduct in the period from approximately January 2026 onwards.

What Axventure did not disclose was that FESB had, at Axventure's own request, agreed to a moratorium on recoupment of the advance payment for precisely the period November 2025 to February 2026. Axventure's own letter requesting this moratorium, dated 10.11.2025, expressly acknowledged severe cash flow stress.

The moratorium meant that no recoupment was deducted from IPC Nos. 18 or 19 the very certificates at the heart of the alleged financial strangulation. This omission was directly material to the central ground of unconscionability advanced at the ex parte stage.

Axventure's reply attempts to recharacterise the advance payment as a commercial acceleration measure initiated by Axventure itself, pointing to its letter titled "Request For Advance Payment To Accelerate Work."

This recharacterisation partially diminishes the force of FESB's submission of a "benevolent developer." However, it does not answer the moratorium point. Whether the advance was commercially motivated or altruistic, the fact that FESB agreed to suspend recoupment during the exact period of alleged financial strangulation at Axventure's own request was a material fact that went to the heart of the strangulation narrative and should have been disclosed.

The second significant non-disclosure relates to the without prejudice character of the 10.12.2025 meeting. At the ex parte stage, Axventure portrayed this meeting as an oppressive ambush and relied upon its contents as evidence of bad faith and pre-determination.

What Axventure did not disclose was that the meeting was conducted on a without prejudice basis and that mutual termination was discussed. In Tripple International Limited v Belia Cermat Sdn Bhd & Ors [2016] MLJU 573, the court affirmed that communications made in a genuine attempt to settle a dispute are privileged and inadmissible in subsequent litigation. To selectively rely on the contents of a without prejudice meeting to paint a narrative of oppression while concealing its privileged character is a material omission.

Axventure responds in its reply, relying on the principle in Gumusut-Kakap (supra) that without prejudice materials may be disclosed where necessary to rebut a false or misleading version of events presented to the court.

However, I am unable to accept this submission. Axventure cannot simultaneously invoke the without prejudice meeting as evidence of oppression, conceal its privileged character, and then seek to justify the concealment on the basis that the meeting was being used to rebut a misleading narrative.

If Axventure wished to rely on the meeting at all, the obligation was to disclose its without prejudice character fairly and entirely at the ex parte stage.

A further procedural irregularity merits attention. Under Order 29 rule 1(2A)(c) of the Rules of Court 2012, the affidavit in support of an ex parte application must contain a clear statement of the facts relied on to justify the application ex parte, including details of why notice was not given to the other party.

In Eco Majestic Sdn Bhd v Setia Ecohill 2 Sdn Bhd [2018] MLJU 412, the court set aside an ex parte order where the applicant had failed to show sufficient cause for bringing the application without notice when the parties were at the material time in communication and negotiation.

Axventure's justification that there was an imminent risk that FESB would pressure AmBank to expedite payment is unsupported by any evidence that FESB had approached AmBank or that payment was imminent. No demand or correspondence to that effect was disclosed.

Applying the Noor Jahan (supra) test, this Court finds that the non-disclosures taken cumulatively were sufficiently material that a full and fair presentation of facts at the ex parte stage would have materially affected the court's assessment of the financial strangulation ground, which was central to the ex parte application.

It is not necessary for each individual non-disclosure to independently meet the threshold. Viewed in their totality, the advance payment/moratorium omission, the concealment of the without prejudice character of the 10.12.2025 meeting, and the inadequate justification for proceeding ex parte without notice to FESB, collectively reach the standard required to set aside the Ex Parte Order.

The Ex Parte Order is accordingly set aside.

The setting aside of the Ex Parte Order does not conclude the matter. This Court must then address the substantive OS for injunctive relief on the inter partes evidence now before it. The court does so de novo, considering the full affidavit record of all parties.

Before considering each of the factual grounds relied upon by Axventure, it is necessary to address a preliminary point arising from the parties' submissions. Axventure consistently maintains that the substantive disputes between the parties including delay, certification, payment, the Stop Work Order, the validity of the termination, progress measurement and the recovery programmes are matters properly to be determined by the arbitral tribunal.

At the same time, Axventure invites this Court to accept those very matters as establishing a strong prima facie case, or at least a seriously arguable case, of unconscionability sufficient to restrain FESB's call on the Performance Bond.

I am unable to accept that approach. The fact that allegations are to be considered cumulatively does not relieve the Court of the need to examine whether they are supported by the contemporaneous evidence before it.

This Court is not required, for the purpose of an interlocutory application, to assume the correctness of Axventure's version of disputed facts. Where the contemporaneous documentary record provides a direct answer to an allegation, that evidence must be taken into account in determining whether the high threshold for unconscionability has been met. Equally, the existence of a genuine contractual dispute, without more, does not by itself establish unconscionability.

The proper approach, consistent with the authorities, is therefore to consider the totality of the contemporaneous evidence, including the affidavits, contemporaneous documents and any relevant admissions, and to determine whether the only realistic inference is that FESB's conduct was so manifestly unfair, oppressive or lacking in good faith as to amount to unconscionability.

It is on that basis that I proceed to examine each of Axventure's grounds.

Pre-Determination: The Crest Builder Allegation

Axventure alleges that FESB had predetermined to remove it from the Project and appoint Crest Builder as the replacement contractor, evidenced by site visits on 1, 2 & 18.12.2025 and the subsequent tender exercise.

This Court finds the pre-determination allegation to be the weakest pillar of Axventure's case. FESB's uncontroverted evidence is that the Crest Builder site visits took place during the SWO period, when Axventure's own works were suspended and site conditions were accessible to any party conducting feasibility or contingency assessments.

This Court accepts that a developer facing a project already in severe delay, with 552 purchasers holding Sale and Purchase Agreements subject to Schedule H liquidated damages, had legitimate commercial justification for contingency planning at that stage.

The Court finds this is consistent with the principle affirmed in Daya CMT Sdn Bhd v Yuk Tung Construction Sdn Bhd [2016] MLJU 352 that an employer need not wait until after the contractual completion date before acting on a contractor's failure to proceed regularly and diligently.

More significantly, the formal tender exercise for a replacement contractor was only initiated on 25.2.2026 after the Notice of Termination of 11.2.2026. The tender involved two contractors, required review of approximately 3,000 pages of drawings and documents, and resulted in Crest Builder being awarded a contract at a premium of RM14,500,000.00 over Axventure's original contract sum, requiring an accelerated completion in 19 months against the original 30-month programme.

It is inherently improbable that a developer would deliberately incur an additional RM14.5 million contractual liability and require an accelerated completion period in order to remove a contractor without justification.

The commercial implausibility of the alleged scheme is a weighty consideration. Further, this finding is consistent with the approach in JSNT2 Sdn Bhd v Exyte Malaysia Sdn Bhd & Ors [2024] MLJU 3666, where the court held that the presence of a third-party contractor before a bond call does not, without more, constitute unconscionable conduct.

The pre-determination pillar accordingly fails.

(ii) Financial Strangulation: IPC No.19 and Progress Claim No.20

Axventure alleges financial strangulation arising from an alleged arbitrary retrospective deduction of RM841,143.01 in IPC No.19 and the non-issuance of a certificate for PC No.20.

On IPC No.19, FESB's evidence is that the deduction reflected a genuine reassessment of concrete works at Tower 1, Level 9 by the independent Quantity Surveyor, ELP QS. FESB produced Axventure's own Request for Work Inspection ("RFWI") forms, which confirm that the concrete works at Tower 1, Level 9 were not completed as at the valuation date of 22.12.2025 they were completed only in January 2026.

Crucially, Axventure did not challenge these RFWI forms by counter-affidavit. The correction is justified under Clause 30.3 of the PAM 2006 Contract, which expressly permits review and reassessment of valuations in subsequent certificates. This is not a retrospective arbitrary deduction. It is a professionally sanctioned correction supported by the contractor's own inspection records.

On PC No. 20, FESB's evidence is supported by a Statutory Declaration from Mr. Terence Kee Sao Chewn of ELP QS a first-hand, contemporaneous account from an independent professional.

That evidence establishes that ELP QS proactively sent a draft Valuation No.20 of RM820,678.77 to Axventure before any formal certification; that Axventure was invited to raise disagreements on an item-by-item basis; that Axventure's representatives verbally asserted the valuation should be RM3,600,000.00 but provided no breakdown or substantiation; and that Axventure's own managing director reduced his expectation to the range of RM2,000,000.00 to RM2,500,000.00 before the meeting ended without conclusion.

This account was never challenged by Axventure in a counteraffidavit. The non-issuance of PC No. 20 in these circumstances does not constitute suppression of payment.

This Court further notes that, upon termination of the Contract on 11.2.2026, Clause 25.4(d) of the PAM Contract relieved FESB of any obligation to make further payments until after the completion of the Works and the ascertainment of the final financial position of the Project.

Axventure seeks to escape this by challenging the validity of the termination. But as this Court addresses below, the validity of the termination is a matter for arbitration. Its existence as a dispute does not retroactively make the withholding of post-termination payment unconscionable.

Most fundamentally, the financial strangulation narrative is directly and comprehensively contradicted by FESB's documented financial assistance to Axventure.

The RM4,000,000.00 advance payment, the four-month moratorium on recoupment covering the period of alleged strangulation, and the Letters of Undertaking to four key suppliers aggregating RM4,650,970.29 in actual exposure collectively demonstrate the opposite of the oppressive pattern alleged.

Those contemporaneous facts sit uneasily with Axventure's allegation that FESB deliberately sought to strangle its cash flow.

Axventure submits in reply that the advance was a commercial acceleration measure, not benevolence. This reframing is noted but does not assist Axventure.

Whether the advance was commercially motivated or altruistic, the moratorium on repayment during the precise period of alleged strangulation is not answered by characterising the original advance as commercially initiated.

(iii) The DBKL Stop Work Order

Axventure relies on the DBKL SWO as part of its cumulative matrix, contending that reliance on defaults arising during or around the SWO period was oppressive and that the SWO was caused by external regulatory factors beyond its control.

FESB's contemporaneous documentary record compound notices from DBKL pre-dating the SWO, resident complaints between 13 & 20.11.2025, the Architect's correspondence warning of regulatory consequences, and Al No. 55 of 21.11.2025 instructing cessation of works pursuant to the DBKL notice all support FESB's position that the SWO was attributable to Axventure's own regulatory non-compliance.

Axventure's reply correctly observes that the SWO itself does not on its face recite FESB's stated reasons. However, the existence and content of the pre-SWO regulatory record remains uncontradicted.

More importantly, the SWO alone does not establish the alleged delay. The project delay trajectory pre-dated the SWO. By August 2025, the project was already at -0.32% behind schedule. The SWO ran for approximately four weeks. Even after its lifting on 19.12.2025, the delay worsened from -10.83% to -17.11% by January 2026.

The SWO therefore cannot be characterised as the primary cause of the Project's delay. The SWO pillar does not individually or cumulatively advance the unconscionability case to the required threshold.

(iv) Disputed Termination

Axventure contends that the NODs were defective and the termination was wrongful. FESB accepts this is a matter for arbitration. However, Axventure advances an interesting argument in its reply: FESB cannot simultaneously rely on the disputed termination to defeat Axventure's payment claims under IPC No.19 and PC No.20 (arguing that upon termination no further payment is due under Clause 25.4(d)) and also rely on that same termination to justify the bond call.

This argument has some force but ultimately does not assist Axventure. The circularity identified is not legal but practical: whether the termination was valid or invalid is the very issue for arbitration. The bond call was made on the basis of FESB's assertion that the termination was valid and that Axventure had defaulted.

If it transpires in arbitration that the termination was wrongful, Axventure will have its remedy there, including recovery of the bond sum and consequential damages. That is precisely the commercial bargain struck by the parties in agreeing to an arbitration clause. The existence of a genuine termination dispute does not, without more, constitute unconscionability sufficient to restrain the bond call.

The delay trajectory, however, is not a bare dispute. It is supported by a comprehensive contemporaneous documentary record: the Architect's monthly progress reports, the manpower records, the RFWI forms, and the 2nd NOD itself none of which Axventure effectively contradicts.

The Court notes the TEDUH/KPKT progress figures raised by Axventure in reply (40.18% and 54.55%) which FESB explains by reference to the inclusion of substructure and superstructure works not within Axventure's contracted scope.

This is a disputed question of methodology properly for arbitration. But it does not dislodge the documented and uncontested trajectory of worsening delay on Axventure's own contracted scope.

Timing of the Bond Call

Axventure characterises the bond call as oppressively timed. This Court disagrees. The call was made 6 weeks after the Notice of Termination and after the replacement contractor had been engaged through a documented tender process. FESB needed time to quantify its exposure and arrange replacement procurement.

A call 6 weeks after termination, following a measured tender exercise, is not the conduct of a party acting oppressively or in bad faith. It contrasts materially with the facts of Dunggon Jaya (supra), where the guarantee was called immediately following termination.

(vi) The Dunggon Jaya Comparison

Axventure places considerable reliance on Dunggon Jaya (supra). In that case, the Court of Appeal restrained the call on the performance bond after considering the cumulative effect of the employer's conduct, which included manipulation of the certification process to engineer non-payment, withholding retention monies, terminating the contract despite earlier indulgences, and making an immediate call on the performance bond. Collectively, those circumstances were held sufficient to establish a seriously arguable case of unconscionability.

The present case is materially different. The contemporaneous evidence shows that FESB provided Axventure with a RM4,000,000.00 advance outside the Contract, granted a fourmonth moratorium on its recoupment at Axventure's request, issued Letters of Undertaking to Axventure's suppliers, afforded Axventure further time to recover, explored the possibility of a mutual termination before exercising its contractual right to terminate, and called on the Performance Bond only some six weeks thereafter.

Accordingly, rather than supporting Axventure's case, Dunggon Jaya (supra) illustrates why the present facts do not meet the exceptional threshold required to establish unconscionability.

(vii) Cumulative Assessment

This Court has considered the five pillars of Axventure's unconscionability case cumulatively as required by Dunggon Jaya (supra). Having done so, it finds that even taken together, they do not disclose a strong prima facie case or seriously arguable case that the only realistic inference from the totality of the circumstances is unconscionability.

What the cumulative record reveals is a construction dispute involving a contractor in genuine severe delay despite repeated contractual accommodation, whose performance deteriorated progressively over 14 months, who was given repeated warnings and opportunities, whose termination followed documented and professionally evidenced defaults, and whose bond was called in measured fashion 6 weeks later. That is not unconscionability. It is a construction default and the exercise of a legitimate contractual right.

Ultimately, Axventure's case seeks to elevate a series of disputed contractual issues into a case of unconscionability. Even when considered cumulatively, those issues remain matters going to the parties' contractual rights and obligations, which are properly to be determined in arbitration. They do not disclose the exceptional circumstances required to justify restraining the operation of an unconditional performance bond.

The threshold required by Sumatec (supra) is not approached, much less crossed. The OS for injunctive relief must accordingly be dismissed.

In the event this Court is wrong on the unconscionability threshold which it does not accept this Court would nonetheless find that the balance of convenience favours the refusal of injunctive relief.

The Federal Court in Esso Petroleum (supra) recognised the commercial significance of unconditional performance bonds and held that the balance of convenience will generally tip heavily against the grant of an injunction restraining a call on such bonds. That general principle is reinforced by the specific commercial circumstances of this case.

If the injunction is maintained, FESB is denied access to the contracted security at a time when it faces: Schedule H LAD exposure at RM105,000.00 per day on 552 sold residential units, accruing at RM3,150,000.00 per month; a replacement contract premium of RM14,500,000.00; an outstanding advance payment of RM2,500,000.00 unrecouped from Axventure; and vendor claims under Letters of Undertaking of RM4,650,970.29.

These are not speculative future losses. They are compounding, quantifiable, and ongoing. The Performance Bond is precisely the contracted mechanism to fund these consequences of a defaulting contractor's termination.

If the injunction is refused and the bond proceeds are released, Axventure's substantive rights are preserved in arbitration. If Axventure succeeds in showing that the termination was wrongful, it may recover the bond value and any consequential damages from FESB. That is the commercial bargain to which the parties agreed when they incorporated the Performance Bond and the arbitration clause into the Contract.

This Court also accepts FESB's submission that Axventure's cross-undertaking as to damages is of doubtful commercial worth. Axventure's own letters of June and November 2025 acknowledge severe cash flow stress. The AmBank letter of 24.3.2026 discloses insufficient balance in Axventure's account.

Axventure itself emphasised the potentially serious commercial consequences of a bond call. A cross-undertaking of questionable value does not adequately protect FESB against the compounding losses it faces.

Furthermore, this Court notes the interests of 552 residential purchasers who are third parties directly affected by the pace of completion. The continuation of the injunction restricts FESB's access to liquidity needed to fund the completion of the Project, potentially exacerbating the delay that has already occurred.

The balance of convenience favours the refusal of the injunction and the release of the Performance Bond.

FESB also seeks an immediate inquiry as to damages pursuant to Axventure's cross-undertaking. This prayer is premature and is not granted at this stage.

In RIH Services (M) Sdn Bhd v Tanjung Tuan Hotel Sdn Bhd [2002] 3 CLJ 83, the court held that an ex parte order lapsing or being set aside does not automatically entitle the respondent to damages. The question is whether the ex parte order ought to have been made at all, and only if it should not have been made does the order for assessment of damages follow.

While this Court has set aside the Ex Parte Order for the reasons stated above, the quantification of any loss caused by the period of interim restraint between 27.3.2026 and the date of this judgment is best assessed in the context of arbitration, where the underlying merits of FESB's termination and bond call will be fully and finally determined.

To conduct an inquiry as to damages now, before the arbitral tribunal has resolved whether FESB's termination and demand were lawful, risks producing findings that are premature and potentially inconsistent with the arbitral outcome.

FESB's prayer for an immediate inquiry as to damages is accordingly deferred.

For all the reasons set out above, this Court makes the following orders:

FESB's application (Enclosure 32) to set aside the Ex Parte Injunction Order dated 27.3.2026 (Enclosure 17) is allowed;

Axventure's Originating Summons dated 25.3.2026 (Enclosure 1) for injunctive relief is dimissed;

AmBank (M) Berhad shall release the sum of RM12,600,000.00 under the Performance Bond (Reference No. T01725IBG1065493) to the $ 2 ^{n d} $ Defendant, Freedom Estates Sdn Bhd forthwith;

FESB's prayer for an immediate inquiry as to damages pursuant to Axventure's cross-undertaking is deferred, to be assessed if and to the extent warranted following the determination of the parties' disputes in arbitration;

Costs of RM30,000.00 for the dismissal of the OS and RM8,000.00 for the setting aside of the Ex Parte Order are awarded in favour of FESB, both subject to allocatur. Dated this 20th day of May 2026 RAJES RAGHAVJI JUDICIAL COMMISSIONER HIGH COURT CONSTRUCTION COURT 1 KUALA LUMPUR COUNSEL: For the Plaintiff Fong Phooi Nam (Messrs Fong & Hakim) For the Defendant : Kee Meng Fai and Teoh Yuh Fen and Cheng Wan Xuan (Messrs Belden) Case(s) referred to: Sumatec Engineering and Construction Sdn Bhd v Malaysian Refining Company Sdn Bhd [2012] 3 CLJ 401 Dunggon Jaya Sdn Bhd v Aeropod Sdn Bhd & Anor Appeal [2019] 9 CLJ 734 Noor Jahan bt Abdul Wahab v Md Yusoff b Amanshah & Anor [1994] 2 CLJ 249 Salcon Engineering Sdn Bhd v PRM Energy Systems (M) Sdn Bhd [1994] 1 CLJ 295 Gumusut-Kakap Semi Floating Production System (L) Ltd v Sabah Shell Petroleum Co Ltd [2017] MLJU 877 Creative Furnishing Sdn Bhd v Wong Koi [1989] 2 MLJ 153 Esso Petroleum Malaysia Inc v Kago Petroleum Sdn Bhd [1995] 1 MLJ 149 Pengerang Refining Company Sdn Bhd v Sinopec Engineering (Group) Co Ltd & Anor [2025] CLJU 3373. Tripple International Limited v Belia Cermat Sdn Bhd & Ors [2016] MLJU 573 Daya CMT Sdn Bhd v Yuk Tung Construction Sdn Bhd [2016] MLJU 352 JSNT2 Sdn Bhd v Exyte Malaysia Sdn Bhd & Ors [2024] MLJU 3666 RIH Services (M) Sdn Bhd v Tanjung Tuan Hotel Sdn Bhd [2002] 3 CLJ 83 Legislation(s) referred to: