Kerajaan Malaysia v 1. Shimizu Corporation (WA-24C-56-03/2017)

1.

NISHIMATSU CONSTRUCTION CO. LTD. 3

IJM CONSTRUCTION SDN BHD (JOINT VENTURE) … DEFENDANTS THE JUDGMENT OF Y.A. LEE SWEE SENG [1] This application by the Government of Malaysia, in the context of setting aside an Adjudication Decision, raises once again the polemic but prosaic question of whether its decision on matters of “national security” is final as in it is not subject to review by the Courts. [2] It is not in question that the contract here is a construction contract that would ordinarily permit an unpaid party to proceed with Statutory Adjudication for payment for work done under the Construction Industry Payment and Adjudication Act 2012 (“CIPAA”) and that includes a construction contract entered into by the Government as well. However there is the Construction Industry Payment and Adjudication (Exemption) Order 2014 (the “Exemption Order”) which allows for exemption from the 3 whole of the CIPAA for a contract where the Government is a party and which “relates to national security or security related facilities which includes the construction of military and police facilities, military bases and camps, prison and detention camps, power plant and water treatment plant.” Project [3] The Defendant had neatly summarized the brief narration of facts below, sufficient to form the backdrop for this Court to consider the ground of excess of jurisdiction or no jurisdiction to begin with and later the ground of a breach of natural justice invoked by the Plaintiff to set aside the Adjudication Decision given against it. [4] The Plaintiff is the Government of Malaysia and the Respondent in the Adjudication. The Defendants are an unincorporated joint-venture consisting of four companies:Shimizu Corporation, Nishimatsu Construction Co. Ltd., UEM Builders Berhad and IJM Construction Sdn Bhd. Shimizu Corporation and Nishimatsu Construction Co. Ltd. are Japanese companies. UEM Builders Berhad and IJM Construction Sdn Bhd are Malaysian companies. [5] This unincorporated joint-venture was formed by the Defendants to undertake works for the Pahang-Selangor Raw Water Transfer Project, Lot 4 1-1, Water Transfer Tunnel and Related Works (the “Project works”)

The Project works covered by the Contract involve the construction of a water transfer tunnel for the supply of raw water from Pahang to water treatment plants in Selangor. Once treated in the water treatment plants in Selangor, this 8 water will be supplied to residential and commercial users in

The Project works relate to national security and constitute a security facility. They are therefore excluded from CIPAA by the

Confirmation that the Project works relate to national security and constitute a security facility was provided by one Encik Mohd Khairul Sharizan bin Hamid (“Encik Mohd Khairul”), who said he is the State of Pahang Director of the Office of the Chief Government Security Officer of Malaysia. Encik Mohd Khairul affirmed an affidavit dated 23.11.2016 in the Adjudication proceedings between the Plaintiff and Defendants making a bare assertion that the Project works concern national security and constitute a security related facility. He claimed in this affidavit that the “documents related to this national security matter is classified as an official secret under the Schedule to the Official Secrets Act 1972 [Act 88].” He claimed further in this affidavit that these documents cannot be declassified. The Plaintiff maintained that Encik Mohd Khairul’s assertion in his affidavit that the Project works concern issues of national 9 security cannot be questioned by any court, arbitrator or adjudicator (see paragraph 33 of the Plaintiff’s First Affidavit). [16] Such an argument had been raised many a time in our Courts especially in cases in involving detention under the now repealed Internal Security Act 1960 (“ISA”) and in cases where a Minister’s determination on issues of national security and public order is said to be final. [17] We have progressed very far from the days of Karam Singh v Menteri Hal Ehwal Dalam Negeri (Minister of Home Affairs) Malaysia [1969] 2 MLJ 129 where upon the slightest whiff of national security the Court would literally back off, deferring to the executive’s subjective opinion as they are the best judge of national or public security; having perhaps access to information and intelligence that cannot be disclosed to the Court. [18] That has now been relegated to antiquity and has been found wanting in the light of cases of abuse that had come before the Courts. A more robust approach consistent with the experience of more mature democracies having the Westminster model of government and governance was preferred, consistent with the understanding of the doctrine of separation of powers and the basic structure of the Constitution and the gumption to declare what had always been there in the 10 Constitution, that of judicial powers of the Courts that Parliament cannot legislate with the might of majority to take away. [19] The Court’s inherent identity under the Constitution is that it is the institution that decides on disputes between parties and when the Government is a party to the dispute, it cannot dictate to the Court that certain matters are out of the bounds where the Court’s power to inquire into the action or inaction and interpret the relevant powers under the statute is concerned. Judicial functions of the Court cannot be usurped. [20] The 3 branches of government in the Executive, Legislature and Judiciary are co-equal and all are subject to the Constitution which is supreme. Each would keep the others accountable for inherent in the concept of separation of powers is the keeping in check of any excesses of any branch such that the power of the State is exercised within the constitutional framework of accountability, transparency, fairness, and fundamental liberties. [21] The turning of the tide can be seen in the dicta of Steve Shim CJ (Sabah and Sarawak) in Mohamed Ezam bin Mohd Noor v Ketua Polis Negara & other appeals [2002] 4 MLJ 449; 480 (Federal Court) as follows: 11 “. . . The executive, by virtue of its responsibilities, has to be the sole judge of what the national security requires. However, although a court will not question the executive’s decision as to what nationality security requires, the court will nevertheless examine whether the executive’s decision is in fact based on national security considerations. Here, I would subscribe to the observation of Wee Chong Jin CJ (Singapore) in Chng Suan Tze when he said: It is clear that where a decision is based on considerations of national security, judicial review of that decision would be precluded. In such cases, the decision would be based on a consideration of what national security requires, and the authorities are unanimous in holding that what national security requires is to be left solely to those who are responsible for national security. The Zamora [1916] 2 AC 77 and GCHQ [1985] AC 374. However, in these cases, it has to be shown to the court that considerations of national security were involved. Those responsible for national security are the sole judges of what action is necessary in the interest of national security, but does not preclude the judicial function of determining whether the decision was in fact based on grounds of national security.” (emphasis added). 12 [22] When the executive states that its action or decision is based on national security considerations, it must be willing to submit its action and decision to the scrutiny of the Court. This is all the more imperative where the liberties of the subject is concerned. No actions of the executive is exempt from judicial scrutiny when challenged in Court for otherwise there would evolve over time a culture of immunity and impunity that can only be inimical to a properly functioning Constitution where no subject need to fear the State’s encroachment into their fundamental liberties. [23] When an executive’s action or decision is challenged in Court, it is duty bound to produce objectively verifiable facts that can satisfy the Court that it is in fact acting on the basis of national security considerations. After all reason, logic, reasonableness and fairness should undergird all our actions and the executive is not exempted from this for otherwise it would be different strokes for different folks. [24] The need to observe and respect the doctrine of equality before the law and the entitlement of all to the equal protection of the law cannot be overstated under Article 8 of the Federal Constitution. [25] The majority judgment of the Federal Court in Titular Roman Catholic Archbishop of Kuala Lumpur v Menteri Dalam Negeri & Ors [2014] 4 MLJ 765 (Federal Court) further affirmed this approach. Arifin Zakaria CJ, when delivering the judgment of the majority, said at paragraph 13 [27] that the following passage from Suffian LP’s judgment in Merdeka University Berhad v Government of Malaysia [1982] 2 MLJ 243; 246 (Supreme Court) correctly explained the test : “It will be noted that s 6 used the formula ‘If the Yang di-Pertuan Agong is satisfied etc’. In the past such a subjective formula would have barred the courts from going behind His Majesty’s reasons for his decision to reject the plaintiff’s application; but, as stated by the learned judge, administrative law has since so far advanced such that today such a subjective formula no longer excludes judicial review if objective facts have to be ascertained before arriving at such satisfaction and the test of unreasonableness is not whether a particular person considers a particular course unreasonable, but whether it could be said that no reasonable person could consider that course reasonable – see the cases cited by the learned judge at p 360.” [26] See also the case of Darma Suria Risman Saleh v Menteri Dalam Negeri, Malaysia & Ors [2010] 1 CLJ 300; paragraphs [4] and [5] (Federal Court), which affirmed this requirement. [27] In Sepakat Efektif Sdn Bhd v Menteri Dalam Negeri & Anor and another appeal [2015] 2 CLJ 328 at paragraph [47], the Court of Appeal observed as follows: 14 “... Where an exercise of discretion has a constitutional dimension, it is incumbent on the court to examine that exercise more vigilantly, and not rely on the ipse dixit of the Minister. We have earlier referred to the main lines of case authorities on the approach to be adopted, such as fundamental liberties in the Federal Constitution must be interpreted generously and given a wide meaning, and the courts must read them in a ‘prismatic’ fashion (Lee Kwan Woh v PP [2009] 5 CLJ 631; Shamim Reza Abdul Samad v PP [2009] 6 CLJ 93); state action must not be disproportionate to the object it seeks to achieve, and the measures taken must be fair and not arbitrary and should impair the fundamental right in question no more than is necessary to accomplish the legislative or administrative objective (Sivarasa Rasiah v Badan Peguam Malaysia & Anor [2010] 3 CLJ 507). There is also the issue of where an administrative power is granted as a subjective discretion, courts will subject its exercise to review based on an objective assessment (Mohamad Ezam Mohd Noor v. Ketua Polis Negara & Other Appeals [2002] 4 CLJ 309; Minister of Home Affairs, Malaysia v Persatuan Aliran Kesedaran Negara [1990] 1 CLJ 699; [1990] 1 MLJ 351; Darma Suria Risman Saleh v Menteri Dalam Negeri, Malaysia & Ors [2010] 1 CLJ 300 [2010] 3 MLJ 307). The relevant test to be adopted has also been stressed: it is whether a reasonable 15 minister similarly situated would have acted in the same manner? It means to say courts can test the exercise of subjective discretion against objective facts in order to determine whether the discretion has been fairly and justly exercised. In the context of the facts in these appeals, and testing the exercise of the Minister’s discretion on these facts, and bearing in mind the primacy that should be placed on fundamental rights, it seems evident that the recourse to ‘prejudicial to public order’ has no plausible evidential basis. The learned judge treated the matter as one involving national security, although Her Ladyship accepted that the correct test is the objective test. With respect, the fact demonstrates the case as not being one of national security, nor do the facts support a finding of prejudice to public order or a likelihood of prejudice to public order.” (emphasis added). [28] It is thus clear that the subjective satisfaction of the executive is not sacrosanct and shall be subject to the strict scrutiny of the Court when it is challenged. The Court’s jurisdiction and power to weigh in on executive actions and decisions commonly referred to as the power of judicial review in cases of prerogative writ actions or generally the power to review executive’s actions and decisions is part of the arsenal of judicial powers vested in the superior Courts established under the Constitution. 16 [29] No amount of legislative amendments can diminish this judicial power of the Courts for Parliament cannot by majority reduce the Court to less than a court for that would infringe on the separation of powers and interfere with the basic structure of the Constitution that preserves the Court’s power of judicial review. [30] In the Federal Court case of Semenyih Jaya Sdn Bhd v Pentadbir Tanah Daerah Hulu Langat & another case [2017] 5 CLJ 526 (“Semenyih Jaya”), it was made abundantly clear that Parliament could not amend the Federal Constitution in any way that would impinge on the concepts of the separation of powers and independence of the judiciary. [31] The Federal Court held further that these concepts were an inherent part of the Federal Constitution and could not be circumvented by any law passed by Parliament, thus confirming that Article 121(1) of the Federal Constitution in its current form following its amendment by the Constitution (Amendment) Act 1988 does not alter the fact that judicial power remains with the judiciary. In this regard, the Federal Court speaking through Justice Zainun Ali FCJ said at paragraphs [86]-[91] as follows: “86. Thus to put it in perspective, the judicial power of the court resides in the judiciary and no other as is explicit in Article 121(1) of the Constitution. 17 87. The principles laid down in Keshavananda Bharati v State of Kerala AIR 1973 SC 146 were reviewed and affirmed by the Supreme Court in Indira Nehru Gandhi v Raj Narain AIR 1975 SC 2299. The Supreme Court emphasised the sanctity of the doctrine of separation of powers and the exclusivity of judicial power. Khanne J, in concurring with the majority inter alia held at pages 2340-2347 that: ‘. . . A declaration that an order made by a court of law is void is normally part of the judicial function and is not a legislative function. Although there is in the Constitution of India no rigid separation of powers, by and large the spheres of judicial function and legislation function have been demarcated and it is not permissible for the legislature to encroach upon the judicial sphere. It has accordingly been held that a legislature while it is entitled to change with retrospective effect the law which formed the basis of the judicial decision, it is not permissible to the legislature to declare the judgment of the court to be void or not binding.’

The judiciary is thus entrusted with keeping every organ and institution of the state within its legal boundary. Concomitantly the concept of the independence of the Judiciary is the foundation of the principles of the separation of powers.

This is essentially the basis upon which rests the edifice of judicial power.

The important concepts of judicial power, judicial independence and the separation of powers are as critical as they are sacrosanct in our constitutional framework.

The concepts above have been juxtaposed time and again in our judicial determination of issues in judicial reviews. Thus an effective check and balance mechanism is in place to ensure that the executive and the legislature act within their constitutional limits and that they uphold the rule of law. The Malaysian apex court had prescribed that the powers of the executive and the legislature are limited by the Constitution and that the Judiciary acts as a bulwark of the Constitution in ensuring that the powers of the executive and the legislature are to be kept within their intended limit. (See Pengarah Tanah dan Galian, Wilayah Persekutuan v Sri Lempah Enterprise Sdn Bhd [1979] 1 MLJ 135).” (emphasis added) [32] Further on in its judgment (at paragraph [114]), the Federal Court said: 19 “114. Our Federal Constitution affirms the polemic that judicial power is exercisable only by judges sitting in a court of law; and that the judicial process is administered by them and no other.” [33] As long ago in Public Prosecutor v Dato’ Yap Peng [1987] 2 MLJ 311; 317 (Supreme Court) it was held that the exercise of judicial power involves “the power to examine questions submitted for determination with a view to the pronouncement of an authoritative decision as to the right and liabilities of one or more parties …” [34] The significance of judicial review as part of the basic structure of the Constitution was again discussed in a recent landmark case of the Federal Court in Indira Gandhi a/p Mutho v Pengarah Agama Negeri Perak & Ors and other appeals [2018] 1 MLJ 545 (“Indira Gandhi”) where Justice Zainun Ali FCJ once again distilled the following principles from a host of cases discussed as follows: “58. It would be instructive to now distill the principles as have been illustrated above.

under Article 121(1) of the Federal Constitution, judicial power is vested exclusively in the civil High Courts. The jurisdiction and powers of the courts cannot be confined to federal law. The courts will continually and inevitably be engaged in the 20 interpretation and enforcement of all laws that operate in this country and any other source of law recognised by our legal system;

judicial power in particular the power of judicial review, is an essential feature of the basic structure of the

features in the basic structure of the Constitution cannot be abrogated by Parliament by way of constitutional amendment;

judicial power may not be removed from the High Courts; and

judicial power may not be conferred upon bodies other than the High Courts, unless such bodies comply with the safeguards provided in Part IX of the Constitution to ensure their independence.”(emphasis added) [35] For the learned SFC to submit that the decision of the relevant officer on the fact that the contract relates to national security or security related facilities cannot be reviewed or questioned by this Court would be retrogressive and has to be rejected for being completely opposed to current jurisprudence on the subject as declared by the apex Court. 21 [36] It would be to resurrect that which has long been interned under the ash heap of cases found by the Federal Court to be no longer good law in providing guidance where the subjective satisfaction of the executive is concerned with its restatement of the law in Semenyih Jaya and Indira Gandhi. [37] To accede to the submission of the learned SFC would be to turn the hands of the clock back some 50 years and that would be most regrettable. [38] Here we are not even talking of a privative clause for there is none. It is merely an interpretation of the law on what is “national security” and surely the final arbiter has to be the Court for they have been so entrusted by the Constitution and endowed with the judicial power to decide on all kinds of controversies between the subject and the State. [39] For the Court to abdicate its duty to inquire into the legality of the executive’s action or decision on matters of “national security” would be to allow the executive to, by default, arrogate absolutely this power to itself. The judicial powers of the Court would be rendered sterile and there would be no effective system of checks and balances as we know it in all functioning democracies. [40] This argument advanced by the learned SFC, must with respect, be rejected outright. 22 Whether the Contract is excluded from the scope of operation of the CIPAA by the Exemption Order because the Contract relates to national security or security related facilities [41] I agree with the Defendants that the Plaintiff must show that a properly authorised person acting pursuant to a legitimate source of executive power has declared the contract to be one relating to national security or that it involves a national security facility. [42] The scope and existence of the Plaintiff’s executive powers are defined by statute and the common law (Dato’ Dr Zambry Abd Kadir v Dato Seri Ir Hj Mohammad Nizar Jamaluddin; Attorney General of Malaysia (Intervener) [2009] 5 CLJ 265; paragraph [80] (Court of Appeal)). The Plaintiff therefore cannot purport to act arbitrarily without reference to a legitimate source of power. [43] The requirement that executive powers must be exercised in accordance with law, and not arbitrarily, is further confirmed by Article 39 of the Federal Constitution, which makes clear that the executive authority of the Federation is exercisable “subject to the provisions of any federal law and of the Second Schedule”. Article 39 is worded in the following way: “39. Executive authority of Federation. 23 The executive authority of the Federation shall be vested in the Yang di-Pertuan Agong and exercisable, subject to the provisions of any federal law and of the Second Schedule, by him or by the Cabinet or any Minister authorised by the Cabinet, but Parliament may by law confer executive functions on other persons.” [44] Although Article 39 of the Federal Constitution vests executive power in the Yang di-Pertuan Agong, this power is exercised in practice by Ministers and government officials (Teh Cheng Poh v Public Prosecutor [1979] 1 MLJ 50; 52 (Privy Council)), except in those instances where the Federal Constitution expressly states that the Yang di-Pertuan Agong shall exercise such power. This reality is recognised in Article 39 of the Federal Constitution. It is also recognised in Article 40(1) of the Federal Constitution, which reads as follows: “40. Yang di-Pertuan Agong to act on advice.

In the exercise of his functions under the Constitution or federal law the Yang di-Pertuan Agong shall act in accordance with the advice of the Cabinet or of a Minister acting under the general authority of the Cabinet, except as otherwise provided by this Constitution; but shall be entitled, at his request, to any 24 information concerning the government of the Federation which is available to the Cabinet.” [45] Article 39 of the Federal Constitution recognises that executive authority may be exercised by the Cabinet, a Minister authorised by the Cabinet or persons authorised by a law passed by Parliament. I agree with learned counsel for the Defendants that there are three ways that the Plaintiff can demonstrate that a Minister or particular person has been properly authorised by law to exercise a particular facet of executive power. These three ways are as follows:

First, a Minister’s authority to exercise executive power may be conferred and confirmed by a Gazette notification made pursuant to Section 2 of the Ministerial Functions Act 1969;

Secondly, a person who is not a Minister or Deputy Minister can be delegated executive authority under any written law by the Yang di-Pertuan Agong or a Minister by way of a Gazette notification (Sections 3 and 5 of the Delegation of Powers Act 1956). The powers of delegation under the Delegation of Powers Act 1956 do not include a power to delegate any power provided by a written law to make regulations. These powers of delegation are also confined to delegating powers under written 25 laws; they therefore do not permit the delegation of powers that are derived from prerogative or common law sources; and

Thirdly, a Minister or other person may be given express powers to perform an executive function by a particular statute. [46] The Court is permitted to and must perforce look at the objective facts that may provide a legitimate and lawful basis for the Plaintiff’s determination. Although the Court recognizes that the Plaintiff has a subjective discretion when exercising its executive powers to decide what to do in the interests of national security, the Plaintiff must nevertheless satisfy the Court that there are objective facts that can demonstrate that the Plaintiff is in fact acting reasonably and fairly in saying that the Contract relates to national security or security related facilities. [47] The Plaintiff’s exercise of executive powers must not be unreasonable in the sense that no reasonable person would have acted the way the Plaintiff did. Furthermore the Plaintiff’s exercise of executive power in the interests of national security or security must be proportionate to the lawful statutory or administrative purpose that the exercise of power was intended to meet. [48] In the Court of Appeal case in Sepakat Efektif (supra) it was emphasized that “state action must not be disproportionate to the object it 26 seeks to achieve, and the measures taken must be fair and not arbitrary and should impair the fundamental right in question no more than is necessary to accomplish the legislative or administrative objective”. Confirmation that any action by the Plaintiff must be proportionate to legitimate objectives is provided by the Federal Court’s decision in PP v Azmi Sharom [2015] 8 CLJ 921, which discussed the application of the principle of proportionality under Article 8(1) of the Federal Constitution to legislative and administrative action in light of its earlier decision in Sivarasa Rasiah v Badan Peguam Malaysia & Anor [2010] 3 CLJ 507 and the Court of Appeal’s decision in Dr Mohd Nasir bin Hashim v Menteri Dalam Negeri Malaysia [2006] 6 MLJ 213. It is important to note that PP v Azmi Sharom was decided by the Federal Court on 6.10.2015, more than a year after the Court decided the Titular Roman Catholic Archbishop of Kuala Lumpur case. I agree with the Defendants that the pronouncements by the Federal Court on the principle of proportionality embodied in Article 8(1) of the Federal Constitution in PP v Azmi Sharom therefore must be understood as a further development on the law concerning the scope of permissible judicial scrutiny on executive and legislative action, including executive and legislative action on issues of national security. 27 [49] The law in this area has clearly advanced significantly since the Federal Court’s decision in Mohamed Ezam bin Mohd Noor v Ketua Polis Negara & other appeals [2002] 4 MLJ 449 to permit the courts to examine not just the objective facts on which a decision is based, but also the reasonableness and proportionality of the decision itself. In effect, as the Court of Appeal recognised in a most recent decision on this subject, the objective test allows the courts to consider the substance of a Minister’s decision (Government of the State of Penang v Minister of Home Affairs & Ors [2017] 1 LNS 501; paragraphs [48] and [49]). [50] I agree that what in effect the courts do is to determine whether a decision purporting to be in the interests of national security conforms to the requirements of a rights based democracy and is proportionate with individual rights and liberties, particularly the rights to equality before the law and equal protection of the law in Article 8(1) of the Federal Constitution and the other fundamental liberties in Part II of the Federal Constitution. [51] Simply put the Court will not accept a bald assertion by the Plaintiff that it is acting in the interests of national security without any objective evidence showing that the Plaintiff’s actions are in fact in the interests of national security and are not unreasonable and are proportionate to a legitimate statutory or administrative objective. 28 [52] The relevant parts of the Exemption Order reads: “2. Exemption 1) A Government construction contract as specified in the First Schedule is exempted from all provisions of the Act . . . FIRST SCHEDULE A contract for any constructions works – . . .

that relates to national security or security related facilities which includes the construction of military and police facilities, military bases and camps, prison and detention camps, power plant and water treatment plant.” [53] The designated Minister under the CIPAA is the Minister of Works. However he has not been given any executive authority on national security or security related matters by statute or by a gazetted delegation of authority pursuant to the Ministerial Functions Act 1969 or the Delegation of Powers Act 1956. On the other hand, other ministers and bodies have 29 been expressly given authority to deal with national security and security related matters. I find merits in the Defendants’ arguments as follows:

The Prime Minister is given the executive authority concerning the “formulation of national security and the coordination of national security” pursuant to the Ministers of the Federal Government (No. 2) Order 2013 (PU (A) 184/2013) issued under the Ministerial Functions Act 1969;

By virtue of the National Security Act 2016, a National Security Council has been established with the Prime Minister as its Chairman (Sections 3 and 6). This National Security Council is defined in Section 3(2) of the National Security Act 2016 as “the Government’s central authority for matters concerning national security”. The Council’s functions are “to formulate policies and strategic measures on national security, including sovereignty, territorial integrity, defence, socio-political stability, strategic resources, national unity and other interests relating to national security” (Section 4(a)). The Minister of Works is not a member of the Council;

(c)

First, it is for this Court to determine if the Plaintiff has acted constitutionally and not arbitrarily when purporting to claim that the Project works concern national security and are a security related facility. It is the High Court’s duty to ensure that any action taken by the Plaintiff in the name of national security is fair and proportionate to the ends to be met. As explained in PP v Azmi Sharom [2015] 8 CLJ 921; paragraphs [33] and [42], by reference to a passage from the judgment of Gopal Sri Ram 35 JCA (as his Lordship then was) in Dr Mohd Nasir bin Hashim v Menteri Dalam Negeri Malaysia [2006] 6 MLJ 213; paragraph [8], Article 8(1) of the Federal Constitution guarantees fairness of all forms of State action. This requires that any legislative or executive response to a state of affairs must be objectively fair and proportionate to the object that is intended to be achieved. The Plaintiff cannot take shelter behind the Official Secrets Act 1972 in an attempt to prevent the High Court from investigating the constitutionality and legality of its actions;

Secondly, Encik Mohd Khairul’s bare assertion in his affidavit that documents allegedly classifying the Project works as a national security issue cannot be declassified cannot be accepted in light of the fact that Section 2C of the Official Secrets Act 1972 allows for the declassification of documents. Furthermore, Section 37(1) of the National Security Act 2016 provides an avenue for the use of documents or information on the affairs of the National Security Council in civil proceedings. There are clearly statutory avenues that can be utilized to enable the courts to review classified documents for their constitutionality and legality. Hence, in the absence of an 36 explanation by the Plaintiff why these documents cannot be declassified, the Plaintiff’s failure to produce any documents before this Court to explain why it claims the Project works constitute a national security issue and a security related facility must be seen as little more than an attempt to evade its responsibility to provide objective facts to this Court to enable the Court to determining whether its actions are constitutional and legal;

Thirdly, even if classified documents cannot be declassified, it is still incumbent on the Plaintiff to at least show by way of an explanation why the Project works raise an issue of national security and constitute a security related facility. Statements in the Plaintiff’s first affidavit to the effect that the Project works are intended to meet water shortages in Selangor and the Federal Territories of Kuala Lumpur and Putrajaya merely show that the Project works constitute an important public works project. These statements will not suffice to show that the Project works concern national security or are a security related facility, especially when the Defendants have made a clear and indisputable statement in paragraph 10.4 of the first affidavit affirmed by Takayuki Matsumoto on 21.6.2017 (the 37 “Defendants’ first affidavit”) and paragraph 11 of the Defendants’ second affidavit that the Project works were administered no differently from any other public works project and that the Contract, works documents and plans for the works were not classified as secrets. It is also important to note in this context that the Defendants have made clear in paragraph 10.4 of the Defendants’ first affidavit that they were never told while carrying out the Project works that the works related to national security. This claim by the Plaintiff that the works allegedly relate to national security was raised for the first time when the Defendants commenced the Adjudication proceedings against the Plaintiff. This fact, from an objective point of view, only throws further doubt on the validity of the Plaintiff’s claim that the Project works constitute a security facility. [65] The Plaintiff’s Affidavit is woefully inadequate in showing how the Contract which consists of the construction of the Water Transfer Tunnel and Related Works relates to national security or security related facilities. [66] The Contract itself shows the route that the Tunnel should pass through and so there is nothing so secretive or confidential about it. There is no evidence of extreme weather condition that justify keeping things 38 under wraps with respect to how dire the water needs are. Whilst there may be water disruption and rationing from time to time, this has not come anywhere near to disruption of public order or law and order and much less affecting national security. This is not a case of a dire shortage of water in the Klang Valley, disrupting both life and business. [67] This is not a case where there has been water disruption because of poisoning of the Water Treatment Plant or that enemies of the State has bombed the Water Transfer Tunnel or the Water Treatment Plant. [68] Neither is it a case where a national disaster or catastrophe has struck the Water Treatment Plant. If that had been the case the Government may invoke paragraph (a) of the Exemption Order where a contract for any construction works- “(a) that is carried out urgently and without delay due to natural disaster, flood, landslide, ground subsidence, fire and other emergency and unforeseen circumstances.” [69] There is thus no reasonable nexus between the construction of the Water Transfer Tunnel leading to the Water Treatment Plant and the need to classify this contract as a contract relating to national security or security related facilities. 39 [70] There is a need to apply an objective test to what is stated as a national security matter and the decision of the executive must be based on a national security consideration. No one would deny that a constant supply of clean water for consumer’s consumption and for manufacturing purposes is vital for the well-being of the people and the growth of the economy as a whole. It is clearly of national interest. However that cannot translate into a national security issue. Not every matter of national interest relates to national security. [71] As this is an exemption carved out from the general application of section 2 of the CIPAA, then a decision made must not be arbitrary with respect to classifying it under a national security project or contract but that when the matter is being disputed, a Court of law must be able to apply an objective test and ascertain if what is revealed as national security considerations meet the test of proportionality. [72] Here applying that principle, there is no real justification for stating that the project relates to national security in attempt to exempt it from the application of CIPAA. [73] The only reason that one may surmise as to why the Government would want to classify it that way or to consider it as such a contract is so that the Defendants are deprived the benefits of proceeding with the speedy way afforded by the CIPAA to get its Payment Claim for work done 40 for which they have not been paid and are out of pocket. It is confirmed that the Project of the Defendants have been completed. [74] The first time the Plaintiff raised this exemption from the CIPAA was after the Defendants had filed their Payment Claim and after the Notice of Adjudication had been served. The Plaintiff as Respondent in the Adjudication first wrote to the Adjudicator on 3.11.2016 invoking the Exemption Order which had come into force on 15.4.2014, the same day as the CIPAA. The Contract was dated 25.4.2009 and the Completion Date was on 3.3.2015. [75] One cannot help being disturbed by the fact that the Exemption Order was invoked to deprive the Defendants of the whole of the provisions of the CIPAA. It is difficult to imagine that the Plaintiff with its team of advisers at its disposal in the Ministry of Works did not consult them with respect to whether the Contract in question is one caught under the Exemption Order. [76] The Defendants have no good reason to doubt that it was none other than an ordinary construction contract with the Government to which section 2 of the CIPAA applies in that the whole of the provisions of the CIPAA would apply including the provisions for Adjudication. The Contract was administered like all other construction contracts that the Defendants are accustomed to or at least the local partners are accustomed to. 41 [77] The Plaintiff had more than enough time from 15.4.2014, the date of the Exemption Order, to inform the Defendants that the Contract in question is such a contract. Parties may then have the opportunities to negotiate with one another as to whether they could agree on some modes of contractual Adjudication so that the Defendants are not disadvantaged or prejudiced in any way. [78] The Defendants only knew that the Plaintiff had invoked the Exemption Order after the Notice of Adjudication had been served on them. Reasonableness dictates that any action taken by the Government which would prejudice the rights ordinarily conferred by Parliament through the CIPAA must be communicated to the Defendants as soon as possible so that parties may mutually appraise and assess their positions under the Contract and not for the Plaintiff to spring a surprise on the Defendants after the Defendants had commenced Adjudication. [79] It smacks of bad faith on the part of the Plaintiff and this Court is constrained to so hold and thus would not subscribe to the Plaintiff’s assertion that the Contract relates to national security or is a security related facility. Whether the Contract relating to the Water Transfer Tunnel and Related Works leading to the LRAL 2 Water Treatment Plant is part of the Plant and hence within the scope of the Exemption Order 42 [80] I can accept that the expression used under paragraph (b) of the Exemption Order is a non-exhaustive one as in the use of the words “that relates to national security or security related facilities which includes the construction of military and police facilities, military bases and camps, prison and detention camps, power plant and water treatment plant.” (emphasis added) [81] That would mean that in a case where the Government has credible and cogent reason to conclude that any Project or Contract relates to national security or security related facilities, they are at liberty to persuade the Court with the evidence from the proper designated minister or official duly authorized by statute or gazette notification when their decision is being challenged. [82] However where the argument here is that the subject matter of the construction is that of a Water Treatment Plant and so it falls within the definition of a contract that relates to “national security” or “security related facilities” then the Court must construe the noun “Water Treatment Plant” strictly for what is sought to be done is to take the Contract out of the application of the CIPAA to it under section 2 which provides that it applies to a construction contract entered into by the Government. Under section 4 of the CIPAA “Government” is defined to mean the Federal Government or the State Government. 43 [83] As far as I can see, the Plaintiff had not produced any evidence to show that the Project works relate to national security or constitute a security related facility. It had then attempted to show that the Project works constituted part of the LRAL 2 Water Treatment Plant and thus are subject to the Exemption Order because the said Order expressly excludes Water Treatment Plant from the scope of the CIPAA. To this end, the Plaintiff claimed that the Project works form the water inlet for the LRAL 2 plant and must, therefore, be considered a part of the plant (paragraphs 5 to 7 of the Plaintiff’s second affidavit). [84] For that argument to succeed the documents that the Plaintiff had exhibited must be able to support such a claim. However the relevant exhibits in Exhibits “CTB-1” and “CTB-2” in the Plaintiff’s second affidavit do not support such a claim. On the contrary, these documents support the opposite conclusion that the Project works are not part of the LRAL 2 water treatment plant. [85] The Defendants drew the Court’s attention to the “Garis panduan Pengauditan Pengurusan Project Kerja Bekalan Air” exhibited as Exhibit “CBT-1” in the Plaintiff’s second affidavit, where it is stated that intake works are works designed to extract water for purposes of treatment (see page 3 of Exhibit “CBT-2”). It is explained that these works are therefore a prelude to the water treatment process, and not part of the water treatment 44 process itself. Section 11.3 of the “MWA Guidelines for Water Supply Systems” exhibited as Exhibit “CBT-2” in the Plaintiff’s second affidavit explains the various component parts of a water treatment plant (see page 5 of Exhibit “CBT-2”). These component parts as described in these guidelines do not include a water inlet. Paragraph 11.2.4 of these guidelines states that “the treatment plant can be located as close to the intake site as possible …”, thus confirming that a water inlet is not part of a water treatment plant. Hence I agree with the Defendant that, even if the Project works constitute part of the intake works that feed raw water for treatment to the LRAL 2 Water Treatment Plant, these works do not form part of the Plant. [86] The Defendants also highlighted that further confirmation that the Project works are separate and distinct from the LRAL 2 Water Treatment Plant is provided by the layout plans included as Exhibit “TK-2” in the Defendants’ second affidavit. These layout plans show that the Project works (marked in these plans in yellow) are separated from the LRAL 2 Water Treatment Plant (marked in green) by a Raw Water Pipeline (marked in blue). These layout plans show clearly that the Project works and the Raw Water Pipeline are merely intended to convey raw water to the LRAL 2 Water Treatment Plant. 45 [87] I have no difficulty following the Defendants’ argument that they are not part of the water treatment process in the LRAL 2 Water Treatment Plant. By providing the LRAL 2 Water Treatment Plant with raw water, they merely enable this Water Treatment Plant to treat water. The Defendant could not over emphasized in paragraph 6 of the Defendants’ second affidavit, that the Raw Water Pipeline and the LRAL 2 Water Treatment Plant form no part of the Defendants’ scope of work under its Contract. The works for the Raw Water Pipeline and the LRAL 2 Water Treatment Plant were awarded by the Plaintiff to other parties unconnected to the Defendants. [88] I would agree with the Defendants that there is no basis for the Plaintiff to claim that the Project works form part of the LRAL 2 Water Treatment Plant or that Water Treatment Plants built pursuant to Government construction contracts are automatically exempt from the scope of the CIPAA. [89] It would be an undue strain on the language and indeed it would do violence to the language used to hold that the Water Transfer Tunnel (44 km) and Related Works that are in turn connected by a Raw Water Pipeline (4 km) to the Water Treatment Plant is also a Water Treatment Plant. [90] The word “Plant” must be given its natural and ordinary meaning. The essential principles of statutory interpretation have been explained by the 46 Federal Court in All Malayan Estates Staff Union v Rajasegaran & Ors [2006] 6 MLJ 97; paragraphs [10]-[12]. In accordance with these principles, the meaning of a statute should be ascertained in accordance with the plain meaning of the language used in it. It is only when its plain meaning is in doubt that a court is entitled to look at its intended purpose and assign a meaning to it which, as far as possible, is consistent with that purpose and does not strain the plain meaning of its provisions. [91] I agree with learned counsel for the Defendants that in the present case, the expression “water treatment plant” in the Exemption Order is clear and unambiguous. It thus should be interpreted in a manner consistent with its ordinary, plain meaning. According to the Oxford English Dictionary; 548, a “plant” is defined as “a place where an industrial or manufacturing process takes place”. A water treatment plant is therefore a place where water is treated by some mechanical, electrical and chemical processes. That kind of a treatment does not begin at the Water Transfer Tunnel, important as the tunnel may be in funneling water to the Water Treatment Plant without which the Plant cannot function. [92] In consonance with this plain meaning of the word “plant”, a water treatment plant does not include water pipes (or in this case, a Water Transfer Tunnel) that feeds raw water to the plant for treatment. Such pipes and even tunnels are ancillary, and not part, of the plant. 47 [93] Assuming for a moment that water treatment plants are automatically deemed national security or security related facilities, the Water Transfer Tunnel works that are the subject of the Contract in the present case cannot constitute any part of the LRAL2 Water Treatment Plant. It is merely part of the system that conveys raw water to this Water Treatment Plant. [94] Learned counsel for the Defendants also emphasized the fact that this Water Transfer Tunnel is not even directly connected to the LRAL2 Water Treatment Plant. It is separated from the Water Treatment Plant by a Raw Water Pipeline, which was built pursuant to contractual arrangements to which the Defendants were not parties. [95] I am therefore not persuaded that the Project works in the Water Transfer Tunnel is a Water Treatment Plant and at any rate, even if it is, there is no evidence to suggest that it relates to national security or security related facilities to qualify for exemption from the CIPAA under the Exemption Order. Whether the Adjudicator had failed to give adequate reasons in support of the conclusions and thus was in breach of natural justice in making his Decision [96] The Plaintiff contended that the Adjudicator had breached the rules of natural justice in that the Adjudicator failed to give adequate consideration 48 to the Plaintiff’s arguments in the Adjudication proceedings. The Plaintiff complained that the Adjudicator accepted the Defendants’ evidence on the quantum of their claims despite not being certain of the Engineer’s own assessment in respect of these claims pursuant to the Contract. The Plaintiff further argued that the Adjudicator simply accepted the Defendants’ evidence on their quantum claims without investigating whether this evidence was correct. [97] The learned SFC sought to persuade the Court that the Adjudicator had failed to give reasons for many of his conclusions in his Adjudication Decision, particularly his conclusions on the Defendants’ quantum claims. [98] Briefly the 2 quantum issues are stated as Issue 2 and Issue 3 before the Adjudicator are as follows: “Issue 2 Payment for the cost incurred by the Claimant to upgrade the dewatering system, providing additional pumps, equipment and power supply throughout the course of the TBM-1 Tunnel works to deal with the unforeseeable constant, normal water inflow in the Tunnel. Issue 3 49 Payment for the cost incurred by the Claimant (excluding the costs for improving the dewatering system) as a result of the increase in the tunneling works in the TBM-1 Tunnel caused by unforeseeable geological conditions.” [99] I cannot see how the above complaints against the Adjudicator can justify a setting aside of the whole of the Adjudication Decision on ground of a breach of natural justice. The Plaintiff must show how its allegations that the Adjudicator breached the rules of natural justice had substantively affected its right to a fair hearing. Otherwise it is a mere complaint on merits and as this is not an appeal, this Court would not entertain such a complaint founded on the unhappiness of the Plaintiff over finding of facts of the Adjudicator on ground that had he heard the Plaintiff carefully and considered and weighed the evidence correctly, the Adjudicator would have found for the Plaintiff. [100] The Plaintiff’s allegations that the Adjudicator did not give adequate weight to its evidence and arguments cannot be sustained because the weight to give evidence and arguments in adjudication proceedings is a matter for the Adjudicator. Simply because he had preferred one party’s evidence and argument to the other is not a basis for claiming that he had breached the rules of natural justice. 50 [101] There is no basis for the Plaintiff’s claim that the Adjudicator did not adequately consider its arguments and evidence before him. I agree with the Defendant that a reading of the Adjudication Award as a whole showed that the Adjudicator had no hesitation in concluding that the basis of the Engineer’s quantum computation was wrong. Ultimately, the Adjudicator agreed with the Defendants’ submission that the Engineer could not use the variation clauses in the parties’ Contract to compute the Defendants’ entitlement to actual costs incurred on account of encountering unforeseeable conditions as the rates in the contractual Bill of Quantities used to compute variations were based on the foreseeable scope of work in the Contract, and not unforeseeable events. (See paragraphs 221-228, 232-237 of the Adjudication Decision in Exhibit “CT-16” in the Plaintiff’s first affidavit). The Adjudicator’s use of the expression at paragraph 226 “...that the Engineer’s basis for his assessment may be incorrect....” and at paragraph 227 “....in the Engineer’s Assessment this too may be inaccurate...” is more of a stylistic euphemism rather than being assailed by lingering doubt when, in the final analysis the Adjudicator rejected the evidence and interpretation of the Plaintiff’s Engineer. [102] The Plaintiff’s claim that the Adjudicator breached the rules of natural justice by not giving adequate reasons for his conclusions has no basis. 51 [103] I would agree that the Adjudicator gave comprehensive reasons for his conclusions on the three issues he had to deal with. He was only required to provide reasons for his Decision on the issues before him as provided for under section 12(4) of the CIPAA. [104] This duty is satisfied as long as an Adjudicator’s reasons show that he has dealt with the issues submitted to him and explained his conclusions on these issues (Ranhill E&C Sdn Bhd v Tioxide (Malaysia) Sdn Bhd & Other cases [2015] 1 LNS 1435; paragraph [70] (High Court)). One must appreciate that an Adjudicator works within a strict time frame of having to deliver his Decision within 45 days of the service of the Adjudication Reply in this case. He does not have the luxury of time and we do not expect him to write his Decision like the way a High Court Judge would write his judgment. The Adjudicator had in this case had to plough through 15 over volumes of documents. I find his reasons given in paragraphs 194 - 241 of his Decision to be cogent and comprehensive enough. [105] So long as he had disclosed his reasoning en-route to how he arrived at his Decision, this Court has no basis to fault him on ground of breach of natural justice even if this Court were to disagree with his finding of fact or interpretation of the relevant provisions based on the FIDIC Conditions of Contract for Works of Civil Engineering Construction, Fourth Edition 1987. 52 [106] The requirements of natural justice here is that the Adjudicator must give the parties the opportunity to be heard fairly. It does mandate that the Adjudicator must arrive at a certain decision. Failure to arrive at a decision to one party’s liking is only an error of fact or law or mixed fact and law and if it does not deal with a jurisdictional issue, it cannot then be a breach of natural justice so long as both sides had been heard. [107] In the Singapore case of AM Associates (Singapore) Pte Ltd v Laguna National Golf and Country Club Ltd [2009] SGHC 260 it was held as follows:

By virtue of the Ministers of the Federal Government (No. 2) Order 2013 (PU(A) 184/2013), the Minister of Home Affairs is given the executive authority to deal with matters of internal security and to make declarations in respect of protected places and areas under the Protected Areas and Protected Places Act 1959. [54] I can appreciate the Defendants’ argument that the Minister of Works has not been assigned any power to deal with national security or security related matters. As Article 39 of the Federal Constitution makes clear that executive authority of the Federation must be exercised subject to Federal law by the Cabinet or a Minister authorised by the Cabinet or such other person authorised by Parliament, it must necessarily follow that the power given to the Minister of Works to exempt “[a]ny contract, matter or transaction or any class thereof” in Section 40(b) of CIPAA cannot be read to include a power enabling him to make any decisions on national security or security related matters in light of the fact that he has not been lawfully authorised to deal with such matters. [55] Hence, although he may have the authority under Section 40(b) to exempt contracts from the CIPAA on national security grounds or on the basis that they concern works for security related facilities, his powers under Section 40(b) cannot be construed to permit him to determine what 31 are national security facilities or national security issues. I cannot agree more with the Defendants that to allow him to use Section 40(b) to determine what is a national security issue or a security related facility would be tantamount to allowing him to act unconstitutionally by overriding the provisions in Articles 39 and 40 of the Federal Constitution dealing with the manner in which executive authority is exercised by the Cabinet, Ministers and other persons lawfully appointed by Parliament to exercise executive authority. [56] It follows that this is a further reason why the words “security related facilities which includes the construction of military and police facilities, military bases and camps, prison and detention camps, power plant and water treatment plant” in paragraph (b) of the First Schedule of the Exemption Order should be read to mean such facilities that are in fact security related facilities as determined by law. [57] At the time the Exemption Order came into force in 2014, the power to declare protected areas and places pursuant to the Protected Areas and Protected Places Act 1959 and the powers to deal with national security issues pursuant to PU (A) 184/2013 issued pursuant to the Ministerial Functions Act 1969 were not vested in the Minister of Works. 32 [58] Section 23(1) of the Interpretation Acts 1948 and 1967 provides that subsidiary legislation like the Exemption Order must not be inconsistent with not only its parent Act, but also all other Acts. [59] To construe the Exemption Order in a way that would give the Minister of Works the power to decide what a security related facility was would be tantamount to recognizing that the Minister has powers to make regulations on national security and security related matters notwithstanding the fact that he has not been delegated such powers by Federal law. Such a reading of the Exemption Order would fall foul of the National Security Act 2016, which makes the National Security Council the Plaintiff’s central authority on national security issues and empowers it to formulate policies and strategic measures on national security (Sections 3 and 4 of the National Security Act 2016). Such a reading of the Exemption Order would also fall foul of the Protected Areas and Protected Places Act 1959, which, by virtue of the Federal Government (No. 2) Order 2013 (PU(A) 184/2013) issued pursuant to the Ministerial Functions Act 1969, gives the Minister of Home Affairs the power to decide what are protected areas and places. To ensure that the Exemption Order is not inconsistent with these two Acts, it must be construed to mean that the facilities specifically mentioned in paragraph (b) of its First Schedule will only be 33 recognised as security related facilities if they have been properly designated in accordance with law as such facilities. [60] The Plaintiff had relied on the Affidavit of one Encik Mohd Khairul, who affirmed an affidavit dated 23.11.2016 to show that the Project works relate to national security and are a security related facility. [61] He is merely the Director for the Office of the Chief Government Officer of Malaysia (State of Pahang) and the Secretary for the Committee for Key Points Installations in the State of Pahang. He is clearly not a person authorised to designate works or facilities as national security issues or security related facilities. [62] By virtue of the Ministers of the Federal Government (No. 2) Order 2013 (PU (A) 184/2013) issued pursuant to the Ministerial Functions Act 1969, his office, which comes within the purview of the Prime Minister, is intended to provide “[p]rotective security for Key Points Installations Protected Areas and Protected Places” and “[s]ecurity for protection of government official secrets”. The powers allocated to his office clearly do not include the power to designate facilities as national security facilities or security related facilities. [63] The Plaintiff merely relied on a bare assertion in Encik Mohd Khairul’s affidavit exhibited as Exhibit “CT-17” in the Plaintiff’s first affidavit that the 34 Project works “[relate] to national security and the facilities constructed are security related facilities …” Such a bare assertion, which is no more than a paraphrasing of the words in paragraph (b) in the First Schedule of the Exemption Order, will not suffice to show that the Project works concern national security or are a security related facility (see the case of John Peter Berthelsen v Director-General of Immigration Malaysia & Ors [1986] 2 CLJ 409; 418). [64] The Plaintiff had also claimed in Encik Mohd Khairul’s affidavit that the documents concerning this national security matter are classified and cannot be disclosed. I agree with the Defendants that this cannot excuse the Plaintiff’s failure to produce objective facts that would enable this Court to determine if it has acted in the interests of national security. Learned counsel for the Defendants supported his submission as follows:

Laguna submitted that the Adjudicator had failed to comply with the rules of natural justice in that in coming to the Adjudication Determination, he had failed to take into consideration and/or give proper weight to materials tendered by AMA which showed a discrepancy in AMA’s claim, in particular, its claim that the Concept Design had been approved. Its submissions went into the evidence in order to establish the alleged discrepancy and it then argued that if the Adjudicator had given proper consideration and weight to such discrepancy and had taken into consideration the relevant evidence tendered by the parties, he would have held that all payment claim made by AMA had been made prematurely.

Although the paragraph above contains only a brief summary of Laguna’s contentions, it can be gathered from such summary that what Laguna was complaining about was not really a failure on the part of the Adjudicator to hear both sides of the dispute but a failure on his part to decide the dispute as Laguna considered it should be decided. The audi alteram partem rule required the Adjudicator to receive both parties’ submissions and consider them; it did not require him to decide the dispute in accordance with Laguna’s submissions. It was clear from the Adjudication Determination that the Adjudicator had conducted the adjudication in accordance with the principles of natural justice: he had called an adjudication conference at which both parties were able to make their submissions, an opportunity which Laguna had availed itself of. Thereafter, as the Adjudication Determination itself made plain, the Adjudicator gave consideration to all points raised and he then came to certain conclusions for which he gave his reasons. However dissatisfied Laguna may be with those decisions, it cannot ask for the Adjudication Determination to be set aside because it considers the decisions to be against the weight of the evidence.

The principles of natural justice are concerned with the provision of a fair hearing to contending parties. They do not mandate any particular result. As long as the parties have been given a fair hearing, the decision cannot be set aside for failure to comply with natural justice. A party who is dissatisfied with the decision on its merits cannot use the principles of natural justice to have the decision set aside...” (emphasis added) [108] Likewise in the case of Gazzriz Sdn Bhd v Hasrat Gemilang Sdn Bhd [2016] 1 LNS 1280, [2016] MLJU 1054 it was observed as follows: [45] It cannot be overstated that the unsuccessful party in an Adjudication must not simply raise the ground of breach of natural justice in setting aside an Adjudication Award just because that party now disagrees with the interpretation of law or finding of facts based on the evidence or both. The ground of breach of natural justice should not be used as a backdoor way to set aside an Adjudication Decision made after both parties have been given the opportunity to submit their Payment Claim and Payment Response and followed by Adjudication Claim and Adjudication Response and if need be an Adjudication Reply after that.... 55 .... [47] That 'error' if there be will have to be corrected at Arbitration or Litigation as the Adjudication Decision is only of interim finality and will be overtaken by the fully final Arbitral Award or Litigation Judgment. However to this day the Respondent has not proceeded with any Arbitration or Litigation to correct the so-called error or wrong decision.” (emphasis added) [109] The underlying philosophy and principle undergirding Adjudication is that it is an interim dispute resolution procedure and remedy and the need to find a right answer is subordinated to the need for a quick answer. As such, a breach of natural justice must be “either decisive or of considerable potential importance to the outcome and not peripheral or irrelevant, it must be material”. Simply put, a party complaining of a breach of natural justice must demonstrate that the Adjudicator has gone about his task in a manner that is obviously unfair and that such unfairness has caused him substantial prejudice (ACFM Engineering & Construction Sdn Bhd v Esstar Vision Sdn Bhd [2015] 1 LNS 756. paragraphs [52]-[55] (High Court); Balfour Beatty Construction Ltd v Mayor & Burgess London Borough of Lambeth [2002] EWHC 597 (TCC); paragraph [29]; Carrilion Construction Ltd v Devonport Royal Dockyard Limited [2005] EWCA Civ 1358; paragraphs [85]-[86]; Permintex JSK Resources Sdn Bhd v 56 Follitile (M) Sdn Bhd & Another Case [2017] 6 CLJ 406; paragraphs [60]- [62] (High Court)); I am more than satisfied that the Adjudicator had set out a summary of the Plaintiff’s arguments and evidence in great detail in paragraphs 111 to 162 of his Adjudication Decision (see pages 662-670 of Exhibit “CT-16” in the Plaintiff’s first affidavit). He made very clear in paragraph 199 of his Adjudication Decision that he had considered the parties’ evidence and submissions but felt that not all these submissions and evidence were necessary for him to dispose of the issues in the Adjudication Claim before him (page 677 of Exhibit “CT-17” in the first affidavit). [110] On the two quantum issues, he accepted the Defendants’ argument that where unforeseeable physical conditions were encountered the Defendants were entitled to their actual costs incurred to overcome those conditions, and that such costs could not be computed by reference to the rates in the Bill of Quantities as such rates dealt with the foreseeable scope of work under the Contract (see pages 683-688 of Exhibit “CT-16” in the Plaintiff’s first affidavit). [111] The Plaintiff had relied on the Engineer’s use of the Bill of Quantities rates and variation clauses in the Contract to compute the Defendants’ entitlement to additional payment on account of unforeseeable physical conditions. The Adjudicator found that the Engineer’s basis for calculating 57 this additional payment was incorrect and that the Defendants’ basis of using actual costs incurred was preferable, and in the absence of any alternative computation of this additional payment from the Plaintiff, the Adjudicator was entitled to accept the Defendants’ computation of this additional payment as logical and in line with Clause 12.2 of the Contract dealing with unforeseeable physical conditions (see paragraphs 237 and 238 of the Adjudication Decision at page 688 of Exhibit “CT-16” in the Plaintiff’s first affidavit). [112] There is thus nothing remotely close to a breach of natural justice that I can detect and thus this ground of setting aside the Adjudication Decision has to be dismissed. Pronouncement [113] For all the above reasons I was drawn to only one conclusion: that this Application of the Plaintiff to set aside the Adjudication Decision on ground of no jurisdiction or excess of jurisdiction and on ground of breach of natural justice was without merits and had to be dismissed. [114] I ordered costs of RM15,000.00 to be paid by the Plaintiff to the Defendants. [115] There was also a subsequent application to enforce the Adjudication Decision filed on 30.10.2017 by the Defendants as Plaintiffs in Originating 58 Summons no. WA-24C-193-10/2017. As I had dismissed the Setting Aside Application, I had correspondingly allowed the Adjudication Decision to be enforced with costs of RM8,000.00 to be paid by Kerajaan Malaysia to the Plaintiffs therein. By consent a stay was granted in the Enforcement Order until the expiry of 31.5.2018. Dated: 27.2. 2018. Signed YA LEE SWEE SENG Construction Court High Court Kuala Lumpur For the Plaintiff : Muhammad Firdaus Jamaludin : (Senior Federal Counsel) For the Defendants : Yatis Ramachandran together with : Kenny Chan Yew Hoong, : Lim Shan Yi and Shafrina Shahidan (Messrs Azman Davidson & Co)