Bgmc Corporation Sdn Bhd v Gita Kasturi Sdn. Bhd. (BA-24C(ARB)-8-06/2025)

GITA KASTURI SDN BHD (No. Syarikat: 201101025499(953635-X))

UNITED OVERSEAS BANK (MALAYSIA) BERHAD (No. Syarikat: 199301017069) ... DEFENDANT GROUNDS OF JUDGMENT

This Originating Summons is an application by the Plaintiff pursuant to S.11 of the Arbitration Act 2005 for an Injunction to restrain the 1st Defendant from making a call on the Performance Bond (Bank Guarantee No. 329PG100299) of RM10 million (“the Performance Bond”) from the 2nd Defendant on the basis that the Performance Bond was conditional in nature for which the 1st Defendant has failed to meet the conditions and that the 1st Defendant’s call was unconscionable.

By consent of parties on 25.6.2025 an ad interim injunction was given until the disposal of this OS.

The relevant cause papers in this application are :-

the Plaintiff’s supporting affidavit affirmed by Yong Set

(ii) the 1st Defendant’s affidavit in reply affirmed by Tan Siow Chung on 30.6.2025 (“the Defendant’s Affidavit 1”);

(iii) The Plaintiff’s reply affidavit affirmed by Yong Set Sen on 15.7.2025 (“the Plaintiff’s Affidavit 2”).

On 28.10.2025, I have dismissed the OS with costs and not being satisfied with the decision of this court, the Plaintiff has filed an appeal.

Via a Letter of Award dated 31.7.2017 (“the LoA”), the 1st Defendant appointed the Plaintiff as the main contractor for the Setia Sky Seputeh Project (“the Project”) at the contract sum of RM292,020,465.70. The contract between Plaintiff and 1st Defendant was regulated by the PAM Contract 2006 (Without Quantities) (“the PAM Contract”).

Among the salient terms and conditions of the contracts which are relevant to this application are as follows (in verbatim)-

(A) The LoA “7. The Date of Commencement of Site Possession shall be as follows: Section 1 (Block A and Podium A) - 1st August 2017 Section 2A (Podium B) - 2nd April 2018 Section 2B (Block B) - 1s t October 2018 The possession of Section 2B (Block B) may be extended to another Six (6) Calendar Months. In the event that the possession of Section 2B (Block B) is delayed, the Architect may issue instructions in regard to the revision of the Date of Commencement and Completion Date, but the Contractor shall not be entitled to claim for any loss or damage caused by such delay in giving possession of the Site, nor shall he be entitled to terminate this Contract. In the event of any 2nd extension on the possession of Section 2B, the Clause 21 of COC shall take precedence.

The Completion Date shall be as follows: Section 1 (Block A and Podium A) - 31st July 2020 (Thirty

Calendar Months from Date of Commencement) Section 2A (Podium B) - 15th October 2020 & 2B (Block B) (Thirty and A Half (30 ½ ) Calendar Months from Date of Commencement for Section 2A and Twenty Four and A Half (24 ½) Calendar Months from Date of Commencement for Section 2B) The Contractor shall complete all the necessary works as required under Section 2A in order for the Employer to obtain the Certificate of Completion and Compliance

for Section 1. Notwithstanding the Sectional Completion Dates for Section 2A & 2B, the Architect will only issue one (1) combined Sectional Certificate of Practical Completion (CPC) for the completion of these two (2) sections of Works.

The following Liquidated Damages shall be imposed in event you are unable to complete the works within the stipulated period or within any extended time granted: Section 1 (Block A and Podium A)- RM78,000. 00 per calendar day Section 2A (Podium B) & 2B (Block B)- RM35, 000. 00 per calendar day.

The performance bond amounting to 5% of the Contract Sum, equivalent to Ringgit Malaysia: Fourteen Million Six Hundred One Thousand Twenty Three and Sen Twenty Nine Only (RM14,601,023.29), as required for this project shall be submitted in the approved format before the commencement of works on site; the Performance Bond shall remain valid and effective until the issuance of the Certificate of Practical Completion of Section 2 by the Architect. In the event you do not submit the Performance Bond, the Employer reserves the right to withhold the value of the Performance Bond from progress payment certificate or any money due to you.

SP Setia’s “POLICY AND CODE OF CONDUCT GOVERNING CONTRACTORS DURING DEFECT LIABILITY PERIOD” shall form part of this contract. All visible defects identified shall be rectified immediately, regardless if it is a minor defect. The works will not be deemed practically completed and no Certificate of Practical Completion will be issued unless all defects including minor visible defects are rectified.

Any dispute or differences arising out of or in connection with this Contract/ Works or the implementation of any of the provisions of this Contract/ Works which cannot be settled amicably shall be submitted to arbitration and the reference shall be to a single arbitrator to be jointly appointed by both parties. If the parties do not concur in the appointment of the arbitrator, then the arbitrator shall be appointed by the President, for the time being, of the Regional Centre for Arbitration, Malaysia who shall have the like powers to act in the reference as if he had been appointed by consent of both parties to this Agreement. The decision and award of the arbitrator shall be final and binding on both parties. Save as provided above, the provisions of the Arbitration Act, 1952 (Revised 1972) of Malaysia or any statutory modification or re-enactment thereof for the time being in force shall apply to such arbitration.” [Emphasis Added] B. The PAM Contract “22.0 Damages For Non-Completion

22.1 If the Contractor fails to complete the Works by the Completion Date, and the Architect is of the opinion that the same ought reasonably so to have been completed, the Architect shall issue a Certificate of Non-Completion. Upon the issuance of the Certificate of Non-Completion, the Contractor shall pay or allow to the Employer a sum calculated at the rate stated in the Appendix as Liquidated Damages for the period from the Completion Date to the date of Practical Completion. The Employer may recover such sum as a debt or may deduct such sum from any monies due or to become due to the Contractor under the Contract or the Employer may recover such sum from the Performance Bond. The Employer shall inform the Contractor in writing of such deduction or such debt due from the Contractor. The imposition of Liquidated Damages by the Employer shall not be taken into account by the Architect in the issuance of payment certificates and Final Certificate, and is not subject to the set-off procedures under Clause 30.4 and adjudication.

34.5 In the event that any dispute or differences arises between the Employer and the Contractor, either during the progress or after the completion or abandonment of the Works regarding :

34.5(a) any matter of whatsoever nature arising under or in connection with the Contract;

34.5(b) any matter left by the Contract to the discretion of the Architect;

34.5(c) the withholding by the Architect of any certificate to which the Contractor may claim to be entitled to;

34.5(d) the rights and liabilities of the parties under Clause 25.0, 26.0, 31.0 or 32.0; or 34.5(e) the unreasonable withholding of consent or agreement by the Employer or the Contractor; then the disputes or differences shall be referred to arbitration.

37.0 Performance Bond

37.1 The Contractor shall before the Date of Commencement of the Works, submit to the Employer a Performance Bond for a sum equivalent to the percentage stated in the Appendix as a security for the due performance and observance by the Contractor of his obligations under the Contract up to Practical Completion of the Works.

37.3 In the event the Employer determines the employment of the Contractor in accordance with Clause 25.0 or if there is any breach of the Contract, the Employer may call on the Performance Bond and utilise and make payment out of or deduction from the Performance Bond for the completion of and/or rectification of the Works and reimbursement of loss, and/or expense suffered by the Employer. On completion of the Works, any balance of monies remaining from the Performance Bond shall be refunded to the Contractor without interest.” [Emphasis Added]

7.

(C) The Performance Bond “(2) The Guarantor has agreed to guarantee the due performance of the Contract in manner hereinafter appearing. NOW THE GUARANTOR HEREBY AGREES WITH THE PRINCIPAL AS FOLLOWS:-

If the Contractor shall in any respect fail to execute the Contract or commit any breach of his obligations thereunder then the Guarantor shall within seven (7) banking days upon receipt of written demand pay to the Principal up to and not exceeding the sum of Ringgit Malaysia Fourteen Million Six Hundred One Thousand Twenty Three And Sen Twenty Nine Only (RM14, 601, 023-29) representing 5% of the Contract Value or such part thereof, on the Principal's demand notwithstanding any contestation or protest by the Contractor or by the Guarantor or by any other third party. Provided always that the total of all partial demands so made shall not exceed the aggregate sum of Ringgit Malaysia Fourteen Million Six Hundred One Thousand Twenty Three And Sen Twenty Nine Only (RM14,601,023-29) and that the Guarantor's liability to pay the Principal as aforesaid shall correspondingly be reduced proportionate to any partial demand having been made as aforesaid.

Any demand under this Guarantee from the Principal arising from the Contractor's failure to execute the Contract or breach of his obligations thereunder within the Guarantee Period, must be made in writing and received by the Guarantor at Trade Operations Centre, 7th -8th Floor, Bangunan UOB, 10- 12, Medan Pasar, 50050 Kuala Lumpur within the Guarantee Period or within four (4) weeks from the expiry date of this Guarantee (whichever is later) after which date, this Guarantee is automatically cancelled and shall be considered null and void and the Guarantor shall be absolved of all liability and obligations under this Guarantee notwithstanding that it is not returned to the Guarantor for cancellation.” [Emphasis Added]

It is common ground that the Performance Bond was reduced to RM10 million on 29.3.2024 and the guarantee period was renewed and extended up till the period 1.6.2025- 31.7.2025. This renewed Performance Bond was forwarded to the 1st

On 9.6.2025, the 1st Defendant made a call on the Performance Bond and the Plaintiff received the notification of the call on the Performance Bond from the 2nd Defendant on the same date.

In the call on the Performance Bond, the 1st Defendant very clearly and unequivocally stated at paragraph 2 : “We hereby notify you that the Contractor for the above-mentioned Project, BGMC Corporation Sdn Bhd, has failed to execute the Contract under the Letter of Award dated 31 July 2017 and the Agreement and Conditions of PAM Contract (without quantities) dated 6 October 2017 with Amendments and Amplifications (collectively referred to as “the Contract”) and/or has committed a breach of its obligations under the Contract, wherein the Contractor has failed to complete the Works and/or failed to carry out rectification of the Works and has failed to complete the Project within the prescribed date under the Contract as follows :-

Failed to complete Section 1 of the Project by the

(ii) Failed to complete Section 2A of the Project by the Completion Date on 26 June 2023; and

(iii) Failed to complete Section 2B of the Project by the Completion Date on 26 June 2023. A Certificate of Non-Completion each dated 27 March 2024 for Section 1, Section 2A and Section 2B of the Project have been issued to the Contractor and a copy of the same are attached herewith for your reference.” THE PLAINTIFF’S CASE

In seeking to restrain the 1st Defendant from calling on the Performance Bond, the Plaintiff has contended that the Performance Bond was a conditional Performance Bond and has also raised the issue of unconscionable conduct on the part of the 1st Defendant in making the call on the Performance Bond. The Plaintiff premised their case of unconscionable conduct on the following grounds :-

the 1st Defendant’s refusal to issue the Certificate of Practical Completion (“the CPC”) despite the Works being completed and vacant possession being delivered to the purchasers of the Project;

(ii) the remaining works are defect rectification works within the Defect Liability Period and not outstanding main Works;

(iii) time has become “at large” as the 1st Defendant has allowed the Plaintiff to complete the Works under the Contract and despite the delays, no termination notice was issued by the 1st Defendant;

(iv) the imposition of the Liquidated Damages was unjustified as the delay was not wholly caused by the Plaintiff;

the 1st Defendant has continued to issue work instructions when a call was made by the 1st Defendant on the

(vi) the Certificates of Non Compliance were backdated to support the 1st Defendant’s call on the Performance Bond;

(vii) no notice of default or notice of termination was issued by the 1st Defendant to the Plaintiff and as such, the precondition of the Performance Bond was not fulfilled;

(viii) the call on the Performance Bond has sidelined the dispute resolution mechanism in the Contract. THE 1st DEFENDANT’S CASE

The 1st Defendant resisted the Plaintiff’s application for an injunction denying unconscionable conduct on its part on the following grounds :-

the Plaintiff has committed numerous breaches of the

(ii) the Plaintiff has delayed the completion of the Works;

(iii) the call on the Performance Bond was in order and in accordance with the terms of the Contracts between parties;

(iv) the call on the Performance Bond was in order and in accordance with the qualifying terms in the Performance Bond.

Based on the above, the issues to be determined by the Court was two-fold :-

Whether the conditions to call on the Performance Bond was in fact fulfilled by the 1st Defendant;

(ii) Whether there was unconscionability on the part of the 1st Defendant in making the call on the Performance Bond. LAW

In the case of Cobrain Holdings Sdn Bhd V Expertise International A&I (M) Sdn Bhd & Ors (2015) 11 MLJ 339 the High Court referred to the fundamental principles of bank guarantees and performance bonds. It was held : “[24] First, as expressed earlier in the decisions of Sato Kogyo (M) Sdn Bhd v Salini (M) Sdn Bhd (2014) 10 MLJ 614 and Bina Jaya Mantap Sdn Bhd v Institute of Technology Petronas Sdn Bhd (2014) 11 MLJ 352, bank guarantees are in substance and effect, performance bonds intended to secure the performance of the underlying contract between parties. These bank guarantees are intended to be honoured without fuss or question and upon presentation of documents as opposed to arguments or meeting some threshold which is merit based… [25] …Such guarantees further enjoy “a bias or (rebuttable) presumption in favour of construction which holds a performance bond to be conditioned upon documents rather than facts… A more restrained and strict exercise of discretion is therefore advocated where injunctive reliefs are sought to prevent the demands or calls on such guarantees…”

The Federal Court in China Airlines Ltd v Maltran Air Corp Sdn Bhd (1996) 2 MLJ 517 held at page 534 held that “(A) bank guarantee is a performance bond. There are two types of performance bond. The first type is a conditional bond whereby the guarantor becomes liable upon proof of a breach of the terms of the principal contract by the principal and the beneficiary sustaining loss as a result of such breach. The guarantor’s liability will therefore arise as a result of the principal’s default.”

In China Airlines Ltd (supra.) in order to determine whether there was compliance to the qualifying words in the guarantee i.e. “(T)he said sum shall become payable by us in the event of the said Messrs Maltran Air Corp Sdn Bhd’s failure to perform the said covenants”, the Federal Court, at page 536, held that although the Performance Bond was an “on demand” guarantee, the beneficiary of the performance bond must inform the bank that in making the call it was relying on the basis provided in the performance bond itself. This is what the Federal Court said : “…in the circumstances of the present case, we consider this to be the correct approach. Here, to comply with the terms of the said guarantee, the solicitors’ letter to the bank dated 14 November 1989 specifically demanded payment of RM400,000 under the said guarantee giving the reason that the agent had failed to perform its part of the covenants under the GSA agreement. In addition to making this demand, the letter asserted that it was so made because under art VII of the agreement, the agent had the unconditional responsibility for the due payment to the airline of money in respect of tickets sold which it had continuously failed to settle…In our view, the reference to the breach under art VII of the GSA agreement in the letter does give meaning and effect to the qualifying words in the guarantee, i.e. in the event of the agent’s failure to perform the covenants in the agreement. Thus, on the above grounds we are satisfied – as was the learned judge-that the qualifying words in the latter part of the guarantee has been fulfilled.”

On the grounds to restrain a beneficiary from calling in on a performance bond, the Federal Court in Sumatec Engineering And Construction Sdn Bhd v Malayan Refining Company Sdn Bhd (2012) 3 CLJ 401 held that other than the fraud exception, unconscionability is now a distinct groundfor such a restraint. The applicant must show by manifest or strong cogent evidence of unconscionable conduct on the part of the beneficiary in making the call on the performance bond. At paragraph 39, the Federal Court adopted and agreed with the Court of Appeal’s proposition that the required burden now rested with Sumatec (the applicant) : “As in the case of fraud, to establish ‘unconscionability’ there must be placed before the court manifest or strong evidence of some degree in respect of the alleged unconscionable conduct complained of, not a bare assertion. Hence, the respondent has to satisfy the threshold of a seriously arguable case that the only realistic inference is the existence of ‘unconscionability’ which would basically mean establishing a strong prima facie case. In other words, the respondent has to place sufficient evidence before the court so as to enable the court to be satisfied, not necessarily beyond reasonable doubt, that a case of “unconscionability” being committed by the beneficiary (the appellant) has been established to an extent sufficient for the court to be minded to order injunction sought. This additional ground of ‘unconscionability’ should only be allowed with circumspect where events or conduct are of such degree such as to prick the conscience of a reasonable and sensible man.”

In Kejuruteraan Bintai Kindenko Sdn Bhd v Nam Fatt Construction Sdn Bhd & Anor (2011) 7 CLJ 442, the Court of Appeal held that the principle underlying the unconscionability doctrine was the prevention of oppression and unfair conduct, and because the determination of unconscionability was fact-specific and the courts must consider such claim on a case to case basis and must assess the totality of the circumstances.

In a nutshell, in order to determine whether the call on the Performance Bond by the 1st Defendant was unconscionable or otherwise, the Plaintiff would have to show manifest and strong cogent evidence of the alleged unconscionable conduct. In accordance thereto, this Court must proceed to analyse the facts leading to the call.

S. 11 of the Arbitration Act 2005 allows a party to apply to the High Court for any interim measure, before or during arbitral proceedings.

As the 1st Defendant did not raise any serious objections to the width of the application of S.11 of the Arbitration Act 2005, I accept that Section 11(1) allows for an interim injunction to be granted even before arbitral proceedings and this application is properly made by the Plaintiff. I find support for this in Bumi Armada Navigation Sdn Bhd v Mirza Marine Sdn Bhd (2015)

Conditional Performance Bond

Upon a careful reading of the Performance Bond, namely Clause 1 of the Performance Bond, the Court is satisfied that the Performance Bond was a conditional bond with an underlying term that the Plaintiff shall have first committed a breach of his obligations to trigger the 1st Defendant’s entitlement to make a call on the Performance Bond.

In their letter dated 9.6.2025, in making the demand on the Performance Bond to the 2nd Defendant, the 1st Defendant has stated at paragraph 2 that the Plaintiff “has committed a breach of its obligations under the Contract, wherein the Contractor has failed to complete the Works and/or failed to carry out rectification of the Works and has failed to complete the Project within the prescribed date under the Contract as follows :-

Failed to complete Section 1 of the Project by the

(ii) Failed to complete Section 2A of the Project by the Completion Date on 26 June 2023; and

(iii) Failed to complete Section 2B of the Project by the Completion Date on 26 June 2023.”

It is clear that the 1st Defendant has provided the 2nd Defendant with the basis of making the call and thus fulfilling the qualifying requirement of the Performance Bond.

(ii) Unconscionable Conduct on the part of the 1st Defendant

On the grounds relied upon by the Plaintiff to assert unconscionable conduct on the part of the 1st Defendant as set out in paragraph 11 above, I find and hold that with the exception of subparagraphs (v), (vii) and (viii), the rest of the issues are genuine contractual disputes between the Plaintiff and the 1st Defendant to be determined in the proper forum, i.e. arbitration. I shall proceed to deal with the subparagraphs in turn. Subparagraph (v) : The 1st Defendant continuing to issue work instructions giving the Plaintiff the impression that all was well between parties

It is the Plaintiff’s contention that in the month leading to the calling of the Performance Bond, the Plaintiff received numerous instructions from the 1st Defendant, namely :-

(i)

3.5.2025 : via Whatsapp message requesting the Plaintiff to repair pipe leakage at LG1;

(ii)

6.5.2025 : via Whatsapp message requesting the Plaintiff to carry out water ponding test;

(iii)

7.5.2025 : via Whatsapp message inquiring from the Plaintiff about the “final varnishing works” process for the main road;

(iv)

19.5.2025 : via Whatsapp message asking for information from the Plaintiff on the brand of the doors of a purchaser’s unit;

(v)

31.5.2025 : via Whatsapp message requesting the Plaintiff to collect keys from the site office to attend to rectification works;

(vi)

5.6.2025 : via Whatsapp message requesting the Plaintiff to repair the filter tank at LG1.

The Plaintiff contended that the fact that the 1st Defendant was still giving them instructions pertaining the outstanding Works in the month prior to making a call on the Performance Bond, the 1st Defendant has induced the Plaintiff into believing that things were “normal (all is good)” between them.

It is the finding of this Court that the above messages amounted to nothing more than the 1st Defendant’s instructions to the Plaintiff to ensure that the outstanding Works were completed. By holding the Plaintiff to a standard set by the 1st Defendant (please refer to Clause 28 of the LoA where it was an agreed term that all visible defects identified shall be rectified immediately, regardless if it is a minor defect. The works will not be deemed practically completed and no Certificate of Practical Completion will be issued unless all defects including minor visible defects are rectified), it cannot be said that the 1st Defendant was giving the Plaintiff a false sense of security that it was “all good” when the 1st Defendant made the call on the Performance Bond.

Bearing in mind that the Plaintiff has received written notifications from the 1st Defendant on 31.3.2023 and again on 28.2.2024 on the delay in the completion of the Project (and thus the imposition of Liquidated Damages) and from the Architect from 1.6.2024 on the defects to be rectified by the Plaintiff, it could not be reasonably said the call on the Performance Bond on 9.6.2025 amounted to unconscionable conduct.

The call on the Performance Bond was made by the 1st Defendant due to the Plaintiff’s failure to complete the outstanding Works. The outstanding Works stemmed from either unfinished works or defective works that required rectification. The Plaintiff however contended that the outstanding Works were in reality rectification works under the Defect Liability Period.

It must be noted that Clause 15.4 of the PAM Contract provides that the Defect Liability Period was to be 24 months from the day stated in the CPC.

Whilst the Court accepts that the Certificate of Completion and Compliance (“the CCC”) was issued which allowed the 1st Defendant to deliver vacant possession of the units in the Project to their purchasers, the Certificate of Practical Completion (“the CPC”) for Section 2A and Section 2B was not issued by the Architect under Clause 15.2 of the PAM Contract (only the CPC for Section 1 was issued by the Architect on 21.12.2023).

As provided at Clause 8 of the LoA, the Plaintiff has agreed that the Architect will only issue one (1) combined CPC for the completion of Section 2A and Section 2B.

It is trite that the CCC is a statutory requirement under the Street, Drainage and Building (Amendment) Act 2007 for the building to be occupied, it ensures that the building meets all government regulations for legal occupation. The CPC on the other hand is a contractual certificate between the Plaintiff and the 1st Defendant to certify that the building work has been completed according to the terms of the Contract.

The dispute between parties came to a head when the Architect, despite repeated requests and demands made by the Plaintiff to the 1st Defendant, refused to issue the CPC for Section 2A and Section 2B. This is evidenced in the correspondences between the Plaintiff, the 1st Defendant and the Architect regarding the issuance of the CPC which revealed that:-

on 22.7.2024, the 1st Defendant had notified the Architect that as the Plaintiff has not completed the Works the Architect was asked to defer the issuance of the CPC;

(ii) on 24.9.2024, the 1st Defendant had forwarded the Plaintiff a list of outstanding & defective work;

(iii) on 5.11.2024, the Plaintiff had forwarded the Architect and the 1st Defendant a list of outstanding works completed and list of outstanding and defective works** to be completed;

(iv) on 10.6.2025 the Plaintiff informed the Architect and the 1st Defendant that they have undertaken and completed defect rectification works** (21 in numbers) leaving 15 more ongoing defective rectification works with a target completion latest by 30.6.2025. ** it would appear that the works originally described as outstanding and defective works on 5.11.2024 transformed to defect rectification works on 10.6.2025. No explanation was provided by the Plaintiff for this apparent metamorphosis.

As a matter of fact, the Plaintiff did not complete Section 1, Section 2A and Section 2B by their respective Sections’ Completion Date. The respective Section’s Completion Dates were extended by Extension of Time No. 9 as stated below:-

Section I : Completion Date was on 23.11.2022; (CPC issued was only issued on 21.12.2023)

(ii) Section 2A : Completion Date on 26.6.2023

(iii) Section 2B : Completion Date on 26.6.2023

As no CPC was issued for Section 2A and Section 2B, the Plaintiff’s contention that the outstanding Works were in reality rectification works under the Defect Liability Period is untenable and unmeritorious.

There was also no evidence put forth by the Plaintiff of any negotiation, discussion or indulgence between the Plaintiff and the 1st Defendant on making good or moving forward with the completion of the Project after the delay and breaches by the Plaintiff to show that the 1st Defendant had acted in a mala fide manner.

This is in contrast with the finding of fact in the case of BGMC Corporation Sdn Bhd v MRCB Builders Sdn Bhd & Ors [2022] MLJU 2458, where the High Court held that the Performance Bond was called when the employer gave the impression that “everything was well” and/or “business as usual” as the parties there were constantly in negotiations and discussions regarding the WWF Plan (which objective was (i) the continuing of the current arrangement between the Plaintiff and D1 and to complete the construction of the Project; (ii) avoiding the drawdown on the performance bonds there and (iii) reducing the exposure of the liquidated and ascertained damages) and were at the stage of finalising the same when D1 there issued the Notices of Termination. To the Plaintiff, D1 had been unconscionable in inducing the Plaintiff to believe that there has been, and will be, a continuing relationship between them, which the Plaintiff had acted in reliance upon.

As such, I find and hold that the Plaintiff has, in fact, breached its obligations under the Contract when the Plaintiff delayed the completion of the Works way past the Completion Date and thereafter failed to attend to the outstanding Works and also failed to rectify all visible defects immediately as required by Clause 28 of the LoA.

By virtue of Clause 37.3 of the PAM Contract, if there is any breach of the Contract by the Plaintiff, the 1st Defendant may call on the Performance Bond to utilise and make payment out of or deduction from the Performance Bond for the completion of and/or rectification of the Works and reimbursement of loss and/or expense suffered by the 1st Defendant subject to “(O)n completion of the Works, any balance of monies remaining from the Performance Bond shall be refunded to the Contractor without interest by the 1st Defendant to the Plaintiff .

The usage of the term “all were good” do not ipso facto translate to unconscionable conduct on the part of the 1st Defendant when it later decided to enforce its contractual rights under the Contract.

Consequently, the Court rejects the Plaintiff’s contention that the 1st Defendant had in any manner or form given the impression or represented to the Plaintiff that “all were good” at that point in time, prior to making the call on the Performance Bond by the 1st Defendant. Subparagraph (vii) : No notice of default or notice of termination was issued by the 1st Defendant to the Plaintiff and as such, the precondition of the Performance Bond was not fulfilled

Another complaint made by the Plaintiff was the absence of a written notification from the 1st Defendant pursuant to Clause 22.1 of the PAM Contract.

Clause 22.1 of the PAM Contract deals with the 1st Defendant’s entitlement to Liquidated Damages due to the Plaintiff’s failure to complete the Works by the Completion Date. The Clause further provided as follows : “The Employer shall inform the Contractor in writing of such deduction or such debt due from the Contractor.”

The Court accepts that the 1st Defendant had in fact given the necessary notice in writing of the deduction made to monies due to the Plaintiff. By the 1st Defendant’s letters dated 31.3.2023 and 28.2.2024, the Plaintiff was expressly informed of the deduction made by the 1st Defendant towards the settlement of the Liquidated Damages imposed on the Plaintiff due to the Plaintiff’s failure to complete the Works by the Completion Date.

There were further letters issued by the 1st Defendant (through the Architect) putting the Plaintiff on notice of the amount of Liquidated Damages due to the 1st Defendant by reason of the Plaintiff’s delay in completing the Works. These letters were in fact exhibited by the Plaintiff in the Plaintiff’s Affidavit 1 :-

Letter dated 5.8.2024 where the total Liquidated Damages was RM56,995,000.00 as at 29.7.2024;

(ii) Letter dated 5.9.2024 where the total Liquidated Damages was RM58,115,000.00 as at 30.8.2024;

(iii) Letter dated 7.10.2024 where the total Liquidated Damages was RM59,200,000.00 as at 30.9.2024;

(iv) Letter dated 5.11.2024 where the total Liquidated Damages was RM60,180,000.00 as at 28.10.2024;

Letter dated 5.12.2024 where the total Liquidated Damages was RM61,265,000.00 as at 28.11.2024;

(vi) Letter dated 18.2.2025 where the total Liquidated Damages was RM63,400,000.00 as at 28.1.2025. [the only variable to the calculation of the Liquidated Damages at each date above was only in respect of the non-completion of Section 2A and Section 2B]

The Court is satisfied that the Plaintiff was in fact notified in writing on numerous occasions on the Plaintiff’s delay in the completion of the Works, which constituted a breach of the Contract. By virtue of Clause 22.1 of the PAM Contract, the 1st Defendant was expressly allowed to recover Liquidated Damages from the Performance Bond.

In the upshot, the Court is satisfied that the 1st Defendant was merely exercising its right to call on the Performance Bond upon the Plaintiff’s breach of not completing the Works within the Completion Date. Subparagraph (viii) : The call on the Performance Bond has sidelined the dispute resolution mechanism in the Contract

On the complaint by the Plaintiff that by calling on the Performance Bond the 1st Defendant has not adhered to or has sidelined the dispute resolution mechanism namely adjudication, arbitration or mediation, I am of the view that the calling of the Performance Bond did not in any way hinder, obstruct or impede the parties rights to the dispute resolution mechanism. Putting it in another way, calling on the Performance Bond is independent from the dispute resolution mechanism.

In the final analysis, as stated by the Court of Appeal in Bintai Kindenko (supra.) there must be sufficient evidence to show that the circumstances or conduct are of such a degree that pricks the conscience of a reasonable and sensible man, I do not find any unconscionable conduct in the 1st Defendant making a call on the Performance Bond.

Based on the chronology of events and the documents presented in this case, I am of the view that the events leading to the call and the conduct of the 1st Defendant prior to the call on the Performance Bond do not support the case of an unconscionable conduct.

In the circumstances thereto, the Court therefore dismissed Enclosure 1 with costs of RM15,000.00 to be paid by the Plaintiff to the Defendant (subject to allocator). Dated : 1st December 2025 t.t ………………………………………… Shahriza Zalina Binti Abdul Shukor Judicial Commissioner Mahkamah Tinggi Malaya Shah Alam For the Plaintiff : Jason Cheong Kah Lok & Azrie Hanafie Rusli (Messrs. Kah Sheng & Co.) For the Defendant : Vinayak Sri Ram a/l Sri Ramachandra & Kavin Raaj a/l Veerasamy (Messrs. Rosli Dahlan Saravana Partnership)