Propel Synergy Sdn Bhd v Vistasik Sdn Bhd (WA-24C(ARB)-39-09/2019)

the application by Propel Synergy Sdn Bhd (‘PSSB’) in Originating Summons (‘O.S.’) No. WA-24C(ARB)-39-09/2019 to set aside the Final Award dated 13.7.2019 by the learned Arbitrator, Mr. GK Ganesan Kasinathan (‘Award’) pursuant to subparas 37(1)(a)(iii), 37(1)(a)(iv), 37(1)(a)(v), 37(1)(a)(vi) and 37(1)(b)(ii) of the Arbitration Act 2005 (‘AA 2005’) and/ or under the inherent jurisdiction of the Court. PSSB additionally sought for an order that all recognition and enforcement proceedings in relation to the Award be stayed pending the disposal of the application (‘Setting Aside Application’); and

the application by Vistasik Sdn Bhd (‘Vistasik’) in O.S. No. WA- 24C(ARB)-44-10/2019 for liberty to register and enforce the Award in the same manner as a judgment of the High Court pursuant to s 38 AA 2005 (‘Enforcement Application’). [2] The Award is, by far, the longest which has been the subject of applications made pursuant to ss 37 and 38 AA 2005 in this Court, running into 772 pages. PSSB relied on altogether 11 grounds in the Setting Aside Application. The Court was assisted by the able team of solicitors who represented the parties led by Mr. T. Kuhendran for PSSB and Mr. J. Chandra for Vistasik. They spared no effort in preparing comprehensive written submissions and clarifications including the tables charting the key issues, the respective positions of the parties and the relevant parts of the Award in respect of each ground of challenge relied upon by PSSB. [3] After careful consideration of the cause papers and the written and oral submissions and clarifications, this Court determined that out of the 11 grounds that were advanced by PSSB in the Setting Aside Application, PSSB has established that the Award contains a decision on a matter beyond the scope of the submission to arbitration under s 37(1)(a)(v) of the AA 2005 with regards to the Arbitrator’s findings on “Ground No. 5: Delay in Certification of Payments and Delay in Payment” (‘said Issue’). [4] However, the Court was unable to agree with the submissions by PSSB that the Award ought to be set aside pursuant to the sub-paragraphs under s 37 AA 2005 as cited in prayer (a) of O.S. No. WA- 24C(ARB)-39-09/2019 in respect of the other grounds of challenge against the Award. [5] The Court was further of the view that the Arbitrator’s decision on matters that were submitted to arbitration can be separated from the decision which relates to the said Issue. Therefore, pursuant to sub-s 37(3) AA 2005, the Court ordered that only that part of the Award on the said Issue is to be set aside. [6] It follows from the above that Vistasik’s Enforcement Application was allowed only for that part of the Award which contains decisions on matters submitted to arbitration viz. the whole Award except for the part on the said Issue. Since the said Issue is one out of a total of 13 grounds raised by Vistasik to challenge the determination of the contract between the parties by PSSB, the findings and conclusions of the Arbitrator on the other aspects as to liability and quantum relating to Vistasik’s claims and PSSB’s counterclaim remain unaffected. [7] Upon hearing the submissions by the learned counsels on the issue of costs, the Court had ordered that costs of RM15,000.00 each be paid by PSSB to Vistasik for the Setting Aside Application and the Enforcement Application, subject to allocatur. [8] Aggrieved with the decision as above stated, PSSB has lodged an appeal against the same. I now provide my full grounds of judgment. The Cause Papers [9] The cause papers in relation to the applications are as follows:

PSSB’s O.S. dated 11.9.2019 (encl. 1);

PSSB’s Affidavit In Support (‘AIS’) affirmed by its Director, Lau Keen Fai on 10.9.2019 (encls. 2 - 6);

PSSB’s Additional Affidavit affirmed by the same deponent on 28.9.2019 (encls. 8 - 31);

Vistasik’s Affidavit in Reply (‘AIR’) affirmed by its Director, Chan Wai Keng on 3.10.2019 (encl. 32);

PSSB’s AIR affirmed by the same deponent on 17.10.2019 (encl. 33); and

PSSB’s Additional Affidavit (2) affirmed by the same deponent on 21.11.2019 (encls. 34).

Vistasik’s O.S. dated 10.10.2019 (encl. 1);

Vistasik’s AIS affirmed by Chan Wai Keng on 10.10.2019 (encls. 2 - 16);

PSSB’s AIR affirmed by Lau Keen Fai on 31.10.2019 (encl. 17);

PSSB’s Notice of Intention to Use the Affidavit affirmed by the same deponent on 30.10.2019 (encl. 18);

Vistasik’s AIR affirmed by the same deponent on 19.11.2019 (encl. 19); and

PSSB’s Affidavit AIR (2) affirmed by its Director, Choo Eng Guan on 26.11.2019 (encl. 20). Salient Background Facts [10] Vistasik is a private company incorporated under the Companies Act 1965 [Act 125] and having its address of service at A2-7, Block A, Level 2, Plaza Dwitasik, Jalan Sri Permaisuri, Bandar Sri Permaisuri, 56000 Kuala Lumpur. [11] PSSB is a private limited company incorporated under Act 125 and having its address of business at Suite A-08-09, Level 8, Empire Tower 1, Empire Subang, Jalan SS16/1, 47500 Subang Jaya, Selangor Darul Ehsan. [12] By way of a Letter of Award and Acceptance dated 2.6.2011 (‘LoA’) issued by Akitek KHP on behalf of PSSB as the employer, Vistasik’s offer for Tender A - “Demolition, Refurbishment, Building and External Works” (‘Works’) for the project known as: “Pelan Pindaan Kepada Pelan Kelulusan Dalam Fail No: PKP/MPMBB 03142/96 (P) Bertarikh 31hb January 2008 Pindaan Daripada:- Cadangan Pembangunan Sebuah Hotel 21 Tingkat Di Atas Lot 210, KBXXXIX, Taman Melaka Raya, Daerah Melaka Tengah, Melaka Untuk Tetuan Motif Harta Sdn Bhd Yang Mengandungi: A) Blok A (17 Tingkat) … 352 Bilik B) Blok B (21 Tingkat) … 420 Bilik Jumlah … 772 Bilik C) Hotel Facilities Kepada:- Cadangan Pembangunan Sebuah Hotel 21 Tingkat Di Atas Lot 210, KBXXXIX, Taman Melaka Raya, Daerah Melaka Tengah, Melaka Untuk Tetuan Propel Synergy Sdn Bhd Yang Mengandungi: A) Blok A (17 Tingkat) … 260 Bilik B) Blok B (21 Tingkat) … 396 Bilik Jumlah … 656 Bilik C) Hotel Facilities” (‘Project’) was accepted by PSSB for the Contract Sum of RM103,425,349.60 with the completion period of 18 months and the completion date of 14.12.2012. [13] According to Clause 4 of the LoA, the Articles of Agreement (‘AoA’) and Conditions of Contract (‘CoC’) shall be as contained in the PAM Agreement and Schedule of Conditions of Building Contract 2006 – Private Edition (With Quantities) (‘PAM Agreement’) together with the Supplementary Clauses, amplification notes and modification notes as spelt out in the Contract Documents. Clause 34.5 in the CoC provides that any disputes between the parties shall be referred to arbitration. [14] The Project encountered problems, and this led to the issuance of the Notice of Default dated 20.11.2013 (‘Default Notice’) by the Architect to Vistasik pursuant to Clause 25.1(c) of the CoC. This was followed with the Notice of Determination dated 12.12.2013 (‘Determination Notice’) whereby PSSB determined the employment of Vistasik as the main contractor. [15] Vistasik alleged that the determination of its employment by PSSB was unlawful and invalid. Vistasik claimed that there were outstanding sums due and owing to it under the Architect’s Payment Certificates and for the deductions made by PSSB towards the Performance Bond (‘PB’). [16] On the other hand, PSSB contended that Vistasik had failed to proceed regularly and diligently with the Works and caused delays to the Project. In addition, PSSB complained of defective works by Vistasik and that it had to engage third party contractors to complete the Project and make good the defects. [17] Vistasik referred the dispute to arbitration pursuant to a Notice of Arbitration dated 3.8.2016. The parties agreed to appoint Mr. GK Ganesan Kasinathan as the sole Arbitrator. The initial preliminary meeting was held on 12.5.2017. The hearing and submission stage of the arbitration proceedings took place between 11.12.2017 and 28.8.2018. [18] In para 47 of the Statement of Claim dated 13.6.2017 (‘SoC’), Vistasik averred that PSSB was still indebted to Vistasik for the following outstanding payments: No. Item Date Amount (RM) 1 Arkitek KHP Certificate of Payment No. 26 14.11.2013 4,643,221.03 2 Amount retained from Arkitek KHP Certificate of Payment No. 26 14.11.2013 5,171,267.48 3 DK-QS Certificate of Payment No. 27 05.12.2013 7,258,139.28 4 Performance Bond deducted by the Respondent 3,123,376.80 Total 20,196,004.59 [19] PSSB then presented its Defence and Counterclaim dated 11.7.2017 wherein PSSB claimed for the following: No. Content Costs (RM) i. Total completion costs 193,154,041.10 ii. Less: Amount incurred to complete the contract (-127,007,234.53) Total loss incurred 66,146,806.57 The Award [20] In order to fully appreciate the numerous grounds advanced by PSSB in its attempt to set aside the Award, it is first necessary to understand how the Arbitrator structured the Award and classified the issues for his determination. [21] In Chapter 4 of the Award, the Arbitrator stated that there were 15 issues for determination between the parties and that these comprised of two parts as follows:

Issues concerning Vistasik’s case, namely – “a. whether the Respondent was fixed with liability for its Determination of the Contractor’s services by its Notice dated 12 December 2013; b. whether the Respondent was entitled to rely on any grounds of determination outside the Notice of the Termination dated 12 December 2013; c. the effect and treatment of testimony and evidence tendered by two witnesses, namely RW- 2 and RW-6; and d. whether the parties had finalised and agreed on the quanta [sic] claimed by each party”; and

Issues disclosed in PSSB’s Counterclaim comprising of Question No. 8 to Question No. 15 (which are discussed at pp 404 - 756 of the Award). [22] Vistasik proffered 13 grounds in arguing that PSSB’s determination of Vistasik’s employment was invalid and these are as follows: “Ground No. 1: that the three (3) grounds relied upon in the notice of default and the notice of determination ‘had not been proven’; Ground No. 2: that the Employer had caused delay in the claimant’s works; Ground No. 3: that the Employer had delayed in handing over vacant possession; Ground No. 4: that the Employer had failed or delayed in providing ‘confirmations, drawings, layouts or plans’; Ground No. 5: that there had been ‘delay in certification of payment’ and ‘delay in payment’; Ground No. 6: that there had been a delay ‘in the appointment of NSCs and sub-Contractors’; Ground No. 7: that there had been a ‘failure to address ironmongery for doors in the Apartment Block (paragraph 24 (1); Ground No. 8: there had been a delay on ‘Light Weight Concrete Block (LWC), and delay Ground No. 9: that there were problems with the ‘Water-Proofing System’; Ground No. 10: that the Employer had interfered with the Claimant’s Work; Ground No. 11: that there had been ‘delay in the confirmation of Colour Scheme, Canopy and all-day dining at the Podium Block (claimant’s reply, p.36); Ground No. 12: that the respondent and/or architect had been guilty of poor management of the Project; and Ground No. 13: that there had been direct payment to Nominated sub-Contractors (NSCs) and Domestic sub-Contractors (DSCs).”. [23] On 13.7.2019, the Arbitrator made the following key findings as contained in the Award:

that PSSB’s Notice of Determination of Vistasik’s employment was invalid;

that the delay in the Works was caused by –

PSSB’s delay in handing over vacant possession;

(ii) the delay in providing confirmation, drawings, layouts or plans;

(iii) delay in certification of payments and delay in payments;

(iv) delay in the appointment of the nominated sub-contractors (‘NSC’) and sub-contractors;

failure to address ironmongeries for the doors in the apartment block;

(vi) delay in light weight concrete block;

(vii) delay in water proofing works;

(viii) interference by PSSB in Vistasik’s work;

(ix) delay in confirmation of the colour scheme for the canopy and all-day dining area at the podium block;

poor management of Vistasik/ the Architect; and

(xi) direct payments to NSC and domestic sub-contractors (‘DSC’).

the claim under Certificate No. 26 for the sum of RM4,643,221.03 was allowed. The Arbitrator concluded that PSSB cannot rely on Clause 25.4 of the CoC on the “Rights and duties of Employer and Contractor” in the event of determination of the contractor’s employment as the determination of Vistasik’s employment has been held to be invalid;

the claims for the retention sum of RM5,171,267.48, under Valuation No. 27 dated 5.12.2013 in the sum of RM7,258,139.28 and for RM3,123,376 being the amount which had been deducted as PB were allowed;

that PSSB was not entitled to the sum of RM2,154,057.04 being the costs of engaging third parties to carry out Vistasik’s Works and the sum of RM7,346,713.39 being the costs of defective works;

that the Final Account is not conclusive under Clause 25.6(a) of the CoC; and

that PSSB’s counterclaim be dismissed. [24] The Arbitrator’s determination in Chapter 38 on the “Operative Part Of The Award” is quoted in verbatim below: “1.0: The Claimant’s claim is allowed subject to the following terms:

1.1. The Claimant’s claim for RM4,643,221.03 is allowed with an interest at the rate of 5.0% per annum calculated on a day-to-day basis from 15 December 2013 until the date of full and final payment by the Respondent. I do hereby direct the Respondent to forthwith pay to the Claimant the said sum of RM4,643,221.03 with the said interest rate of 5% per annum calculated on a day-to-day basis from 14 December 2013 until the date of full and final payment.

1.2. The Claimant’s claim for RM5,171,267.48 is allowed with interest at 5% per annum. I do hereby rule and direct the Respondent to forthwith pay to the Claimant the sum of RM5,171,267.48 with interest at the rate of 5% per annum calculated on a day to day basis from 15 December 2013 and to the date of full and final payment.

1.3. The Claimant’s claim for RM7,258,139.28 is allowed with interest at the rate of 5% per annum. I do hereby rule and direct the Respondent to forthwith pay the Claimant the sum of RM7,258,139.28 with interest at the rate of 5.0% per annum calculated on a day-to-day basis from 05 December 2013 until the date of full and final payment.

1.4. The Claimant’s claim for RM3,123,376.80 is allowed with interest at the rate of 5% per annum. I do hereby rule and direct the Respondent to forthwith pay to the claimant the sum of RM3,123,376.80 with interest at the rate of 5% per annum calculated from 12 December 2013 until the date of full and final payment.

2.0. The Claimant’s [sic: Respondent’s] counterclaim and all other claims related to it was dismissed. I do hereby determine that the counterclaim in the sum of RM66,146,806.57 is dismissed.

3.0 I DO HEREBY ORDER AND DIRECT THAT the Respondent reimburse the Claimant all sums paid by it for this arbitration;

4.0 I DO HEREBY ORDER AND DIRECT THAT the Respondent bear and forthwith pay to the Claimant the agreed legal costs in the sum of RM200,000.00 [sic: RM300,000.00];

5.0: I DO HEREBY ORDER AND DIRECT THAT the Respondent bear and forthwith pay to the Claimant all of the costs of this Arbitration, including but not limited to the cost of organisation of the hearings, the cost of Kuala Lumpur Regional Centre for Arbitration (The Asian International Arbitration Centre), the cost of the hearings, the cost of the transcription, the cost of this award, and all other costs related to this arbitration.

5.1 and I DO HEREBY ORDER AND DIRECT THAT the Respondent reimburse the Claimant all monies expended by the Claimant for the same, other than legal costs: and therefore

6.0 Dismiss all other claims and prayers for relief.”. [25] Since the numbering of the paras in each Chapter of the Award begins afresh with para 1, in these Grounds of Judgment, reference shall be made to the page number in the Award whenever a particular para is quoted or referred to. I. O.S. No. WA-24C(ARB)-39-09/2019: The Setting Aside Application [26] PSSB’s Setting Aside Application was premised on subparas 37(1)(a)(iii), 37(1)(a)(iv), 37(1)(a)(v), 37(1)(a)(vi) and 37(1)(b)(ii) of the AA 2005 and/ or under the inherent jurisdiction of the Court. [27] For ease of reference, the relevant portion of s 37 AA 2005 is re-produced below: “Application for setting aside

37.

An award may be set aside by the High Court only if –

the party making the application provides proof that –

… …

(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present that party’s case;

(iv) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration;

subject to subsection (3), the award contains decisions on matters beyond the scope of the submission to arbitration; or

(vi) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Act from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Act; or

the High Court finds that –

…

(ii) the award is in conflict with the public policy of Malaysia.

Without limiting the generality of subparagraph

(1)(b)(ii), an award is in conflict with the public policy of Malaysia where –

the making of the award was induced or affected by fraud or corruption; or

a breach of the rules of natural justice occurred –

during the arbitral proceedings; or

(ii) in connection with the making of the award.

Where the decision on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside. …”. [28] In its Executive Summary, PSSB summarised the three broad grounds on which it contends warrants the setting aside of the Award, namely –

breach of natural justice such that the Award is in conflict with the public policy of Malaysia;

the Award deals with a dispute not contemplated by, or not falling within, the terms of submission to arbitration or contains decisions on matters beyond the scope of submission to arbitration; and

the Award totally disregarded the evidence and went against fundamental principles of law. These would amount to patent and substantial injustice, serious irregularity and other similar serious flaws and is manifestly unlawful and unconscionable and would justify the Award to be set aside under the public policy ground. The Legal Principles [29] An award made by an arbitral tribunal pursuant to an arbitration agreement shall be final and binding on the parties (see sub-s 36(1) AA 2005). [30] Section 8 AA 2005 limits the intervention by the court in matters governed by the AA 2005 to strictly such matters as expressly provided in the Act itself. Hence, an arbitral award cannot be challenged except on the limited grounds as enumerated in s 37 AA 2005. This is consistent with the minimalistic approach in intervention in arbitration and arbitration related matters (see Magna Prima Construction Sdn Bhd v Bina BMK Sdn Bhd and another case [2015] 11 MLJ 841). [31] PSSB bears the burden of proving its grounds of challenge on the balance of probabilities. - Subpara 37(1)(a)(iii) of the AA 2005 [32] There are two limbs to this subpara. PSSB relied on the second limb in seeking to set aside the Award i.e. that it was unable to present its case. In this regard, s 20 of the AA 2005 provides that “The parties shall be treated with equality and each party shall be given a fair and reasonable opportunity of presenting that party’s case.”. Hence, the arbitral tribunal is obligated to give PSSB a fair and reasonable, as opposed to a full, opportunity of presenting its case. [33] In UNCITRAL Model Law & Arbitration Rules: The Arbitration Act 2005 (Amended 2011 & 2018) and the AIAC Arbitration Rules 2018, Sweet & Maxwell, 2019 by Datuk Professor Sundra Rajoo & Special Contributor Dr. Thomas R. Klötzel, it was opined at pp 538 - 539 as follows: “37.49 A distinction must be drawn between a situation where the party is unable to present his case and a situation where a party complains of being hampered in the full presentation of its case. This latter situation may, however, be more appropriately catered for under section 37(2)(b) of the AA 2005. …

37.51 The High Court of Malaya in Infineon Technologies (M) Sdn Bhd v Orisoft Technology Sdn Bhd considered what constituted a violation under section 37(1)(a)(iii). The court in its judgment differentiated between substantive and procedural natural justice. …

37.53 The High Court held that there was no breach of natural justice on the facts of the case and dismissed the claimant’s application to set aside the award. The court drew a distinction between substantive natural justice and procedural natural justice. It held that section 37(1)(a)(iii) was concerned with procedural natural justice and opined as follows: Unfortunately, and regretfully, arbitration law, as it currently stands, does not allow this court to venture beyond procedural due process, since considerations of fairness of a particular decision of the arbitrators go to the merits and therefore are not a proper subject mater for this court to interfere. I have to remind myself that, as far as this case is concerned, this court is not exercising an appellate jurisdiction, and there the matter rests.

37.54 An application under section 37(1)(a)(iii) involves questions of fact. It requires a consideration of the way the proceedings are conducted as well as the conduct of the parties and of the arbitral tribunal. The court will not set aside and award merely because a party could not exhaustively canvas all its arguments, …”. - Subparas 37(1)(a)(iv) and 37(1)(a)(v) of the AA 2005 [34] The arbitral tribunal draws its authority from the submission to arbitration by which it has been appointed. The Arbitrator must therefore decide the dispute according to the scope of the arbitration. He cannot decide the dispute on issues which have not been raised or addressed by the parties or are not relevant to the determination of the dispute; often referred to as a “new difference” (see PT Prima International Development v Kempinski Hotels SA and other appeals [2012] 4 SLR 98 and Kerajaan Malaysia v. Perwira Bintang Holdings Sdn Bhd [2015] 1 CLJ 617). [35] With regards to subpara 37(1)(a)(v) AA 2005, in determining whether the Arbitrator has decided on matters beyond the scope of the submission to arbitration, the Court of Appeal in Sigur Ros Sdn Bhd v Master Mulia Sdn Bhd [2018] 3 MLJ 608 held that the points of claim, defences and replies in an arbitration are akin to pleadings in a civil suit and as such, the “pleadings” at the arbitration define the disputes between the parties and the extent of jurisdiction and submission to the jurisdiction of the arbitrator. In para 85 of the judgment, the Court said that “Not only do these pleadings define the dispute(s) that are referred to arbitration, more importantly, the arbitrator takes his mandate and authority from those pleadings insofar as what is required for his determination. The arbitrator cannot exceed those terms of reference or limits of submission which have been demarcated by consensual agreement between the parties. Otherwise, these breaches may become the basis of setting aside of awards under other provisions of s 37(1)(a) of Act 646.”. [36] If the arbitral tribunal had improperly decided matters that had not been submitted to it or failed to decide matters that had been submitted to it, the Award may be susceptible to be set aside under subpara 37(1)(a)(v) AA 2005 (see The Government of India v Cairn Energy India Pty Ltd & Ors [2014] 9 MLJ 149). That provision is expressed to be subject to sub-s 37(3) of the same Act. This means that those parts of the award which contain decisions on matters which had not been submitted to arbitration may be set aside where those parts are capable of being severed from the other parts of the award which deals with matters falling within the scope of the submission to arbitration. [37] Erroneous interpretations of the law and of the facts are not grounds on which the courts can set aside an award under subpara 37(1)(a)(v) AA 2005 (see PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA [2006] SGCA 41). - Subpara 37(1)(a)(vi) of the AA 2005 [38] Sub-s 21(1) AA 2005 provides that “Subject to the provisions of this Act, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings.”. In the textbook referred to earlier, UNCITRAL Model Law & Arbitration Rules: The Arbitration Act 2005 (Amended 2011 & 2018) and the AIAC Arbitration Rules 2018 (supra, at pp 371 - 372), the learned author illuminated that this sub-s allows the parties the freedom to determine the procedure applicable to the arbitration, subject to the provisions of the AA 2005. The provisions of the AA 2005 which restrict party autonomy relate to the fundamental principles of fairness as found in ss 20, 29 and 35 and sub-s 21(3), 25(1) and 26(3), (4) and (5). [39] Based on para 22, pp 7 - 8 of the Award on “Procedural orders, pleadings, documents and witness statements”, the parties had agreed that where the PAM Rules do not make any provision as to an expert witness, they preferred the rules of the Tribunal to apply. Accordingly, the Arbitrator rules that the International Bar Association Rules on the Taking of Evidence in International Arbitration (29.5.2011) shall apply. [40] As will be seen in the ensuing parts of this judgment, PSSB had invoked this subpara 37(1)(a)(vi) of the AA 2005 in claiming that the arbitral procedure was not in accordance with the agreement of the parties in the sense that the Arbitrator failed to consider PSSB’s points and position or that it was not given an opportunity to be heard. [41] The Singapore Court of Appeal in CRW Joint Operation v PT Perusahaan Gas Negara (Persero) TBK [2011] 4 SLR 305 at pp 320 - 321 held that a “… mere failure by an arbitrator to act as efficiently as he might or a minor divergence from procedural rules established by the parties is not of itself sufficient to justify a remedy for breach of the rules of natural justice. An arbitrator is perfectly entitled to adhere to procedural rules agreed by the parties or adopted by the arbitrator himself within his powers.”. - Subpara 37(1)(b)(ii) of the AA 2005 [42] In Johawaki Development Sdn Bhd v. Majlis Agama Islam Wilayah Persekutuan & Another Case [2020] MLRHU 483, this Court had referred to the decision in Sigur Ros (supra) wherein the Court of Appeal had agreed with the views expressed by the earlier panel in Petronas Penapisan (Melaka) Sdn Bhd v Ahmani Sdn Bhd [2016] 3 CLJ 403, namely – “[39] …

where the award conflicts with the public policy of Malaysia for the reason of there being a breach of the rules of natural justice, it is the whole award which will be set aside and not merely a part of it;

the threshold to satisfy under s 37 AA 2005 is very low as compared to that under s 42, though the courts are slow in setting aside an award, and upon proof, if successful, the court has an option, at either party’s behest, to send back the matter to the arbitral tribunal to eliminate the grounds for setting aside, as set out in sub-s 37(6) AA 2005; and

the threshold to be met under subpara 37(1)(b)(ii) or sub-s 37(2) is on a balance of probabilities that there has been a breach of the rules of natural justice either during the arbitral proceedings or in connection with the making of the award. [40] The Court of Appeal also held that there is no requirement for proof of actual or real prejudice to be met where reliance is placed on subpara 37(1)(b)(ii) read with para 37(2)(b) AA 2005. As for the provision in para 21(3)(b) and s 20 AA 2005, the Court opined that although an arbitrator has the power to draw from his own knowledge and expertise, this power must be read with the arbitrator’s overarching duty to act fairly and in accordance with the rules of natural justice. The said duty is a continuous duty, consistent with the universal concept of fair play that permeates and prevails throughout the whole arbitral process. The parties must be given a reasonable opportunity to present their case or arguments, including supporting or rebuttal evidence on any live issue in the arbitration irrespective of whether the issue was brought up by the parties or the arbitrator. Further, the Court agreed with the ratio in Trustees of Rotoaira Forest Trust v Attorney General [1999] 2 NZLR 452 that, unless there is express or implied agreement to the contrary, the arbitrator is precluded from taking into account evidence or argument extraneous to the hearing without giving the parties further notice and the opportunity to respond.”. [43] The judicial approach to be applied to challenges against an award on the grounds of violation of public policy was explicated by the Federal Court in Jan De Nul (M) Sdn Bhd & Anor v Vincent Tan Chee Yioun & Anor [2019] 2 MLJ 413. In the decision of this Court in SJIC Bina Sdn Bhd v Iskandar Regional Development Authority and another case [2020] MLJU 2366, the legal principles that can be distilled from Jan De Nul’s case was summarised as follows: “(a) the concept of public policy generally is itself a broad concept and the term “public policy” is commonly used to signify some matter which concerns public good and public interest;

the term “public policy” in subpara 37(1)(b)(ii) AA 2005 covers a scope of public policy elements as used generally but in subpara 37(2)(b)(ii), the scope is more specific since it categorises a breach of the rules of natural justice which occurred in connection with the making of an award as being in conflict with the public policy of Malaysia;

in applying the concept of public policy for the purpose of setting aside an award under s 37 AA 2005, the concept of public policy ought to be read narrowly, more restrictively and taken in the higher sense where some fundamental principle of law or justice is engaged, some element of illegality, where enforcement of the award involves clear injury to public good or the integrity of the court’s process or powers will be abused;

the public policy ground for setting aside an arbitral award could be invoked where a violation of the most basic and fundamental notions or principles of morality and justice is proven. It covers fundamental principles of law and justice in both substantive and procedural aspects;

instances such as “patent injustice”, “manifestly unlawful and unconscionable”, “substantial injustice”, “serious irregularity” and other similar flaws in the arbitral process and award would fall within the applicable concept of public policy but these do not mean injustice which is more than de minimis. What is required is that the injustice had real effect and had prejudiced the basic rights of the applicant and where the upholding of the arbitral award would shock the conscience, be clearly injurious to the public good or wholly offensive to the ordinary reasonable and fully informed member of the public;

the circumstances stated in sub-s 37(2) AA 2005 are not exhaustive and other appropriate situations may also fall under the category of “public policy” in view of the opening phrase “without limiting the generality of sub-para (1)(b)(ii)” as appears in sub-s 37(2); and

the court’s intervention should be sparingly used. The court must be compelled that a strong case has been made out that the arbitral award conflicts with the public policy of Malaysia before an order can be made to set aside the award.”. [44] Further guidance when dealing with an application to set aside an award premised on a breach of the rules of natural justice pursuant to para 37(2)(b) AA 2005 can be found in another decision by the apex court, Master Mulia Sdn Bhd v. Sigur Ros Sdn Bhd [2020] 6 MLRA 51. In that case, the Court said: “[53] In the light of the above, we think that the guiding principles on the exercise of residual discretion when an application for setting aside an award is grounded on breach of natural justice may be stated as follows:

first, the court must consider: (a) which rule of natural justice was breached; (b) how it was breached; and (c) in what way the breach was connected to the making of the award;

second, the court must consider the seriousness of the breach in the sense of whether the breach was material to the outcome of the arbitral proceeding;

third, if the breach is relatively immaterial or was not likely to have affected the outcome, discretion will be refused;

fourth, even if the court finds that there is a serious breach, if the fact of the breach would not have any real impact on the result and that the arbitral tribunal would not have reached a different conclusion the court may refuse to set aside the award;

fifth, where the breach is significant and might have affected the outcome, the award may be set aside;

sixth, in some instances, the significance of the breach may be so great that the setting aside of the award is practically automatic, regardless of the effect on the outcome of the award;

seventh, the discretion given the court was intended to confer a wide discretion dependent on the nature of the breach and its impact.”. [45] In the context of an application grounded on subpara 37(1)(b)(ii) read with subpara 37(2)(b)(ii) AA 2005, even though the Court may find that a breach of the rules on natural justice has been established or that an arbitral award is in conflict with the public policy under s 37 AA 2005, it does not necessarily mean that the Award must be set aside as a matter of course. The power of the Court to set aside the Award is discretionary and will not be exercised automatically in every case where the complaints are established [see para 56 in Jan De Nul’s case (supra, at p 429 citing Kyburn Investments Ltd v Beca Corporate Holdings Ltd [2015] 3 NZLR 644 and Sigur Ros (supra)]. These discretionary powers must be exercised judiciously (see para 40 in SJIC Bina’s case). [46] With all the above-mentioned legal principles in mind, I shall now address each of PSSB’s grounds in challenging the Award in turn. The Grounds of Challenge [47] For purposes of brevity, in setting out each of PSSB’s grounds of challenge, the following terms are utilised:

“Jurisdiction Point” when the provisions which were invoked by PSSB falls under subparas 37(1)(a)(iii), 37(1)(a)(iv), 37(1)(a)(v) and/ or 37(1)(a)(vi) of the AA 2005; and

“Natural Justice Point” when the basis for the setting aside of the Award was pursuant to subparas 37(1)(b)(ii) and 37(2)(b)(i) or (ii) of the AA 2005. 1st Ground: Jurisdiction Point [subpara 37(1)(a)(iv) AA 2005] and Natural Justice Point [subparas 37(1)(a)(iii), 37(1)(a)(vi) and 37(1)(b)(ii) AA 2005] – Was there default in the Majlis Bandaraya Melaka Bersejarah (‘MBMB’) Issue? (Ground No. 1 - 1 in the Award) [48] As mentioned earlier, the first ground that was submitted by Vistasik in contending that the determination of its employment was invalid is that the reasons as stated in the Default Notice and the Determination Notice had not been proven. [49] In the Default Notice, the Architect referred to, among others, its letter dated 18.11.2013 on “MBMB’s Site Visit November 18th, 2013” and noted that no effective and apparent action had been taken by Vistasik to reduce the delay of works at the site. The Architect further said that “… Persistent lack of attendance, lack of manpower resources and competent site supervisors, poor site organization and coordination are still apparent to date. … The overall progress of work was virtually on stand still since your workers have moved out from Site on 14th November 2013 and subsequently you have also failed to carry out the instructions dated 12th November 2013 issued by us. These are indication that you are not proceeding regularly and diligently with the Works as required. …”. As observed by the Arbitrator in para 35 at p 61 of the Award, PSSB’s complaints, when studied against the background of the documents, show that PSSB had basically relied on three reasons in issuing the Determination Notice and these include Vistasik’s alleged non-compliance with MBMB’s instructions. [50] The following are among the documentary evidence which were placed for the Arbitrator’s consideration:

The e-mail dated 12.11.2013 from the Architect to Vistasik to record regarding the site inspection by MBMB’s officers and the subsequent issuance of three compounds by MBMB. Vistasik was asked to make payment for the compounds within 7 days and to carry out the rectification and making good of safety netting, tidy up the site perimeter hoarding and to clear the construction materials placed along the road following MBMB’s warning to complete these works by 17.11.2013, failing which a Stop Work Order will be issued.

MBMB’s letter dated 13.11.2013 to the Architect containing four instructions which must be complied with by 18.11.2013.

The Architect’s letter dated 18.11.2013 to Vistasik stating that Vistasik has yet to carry out MBMB’s instructions and “As you have failed to proceed diligently with the works (you were given a week to comply). This have forced MBMB to issue a final warning, that required of works are not carried out satisfactorily by tomorrow they will issue a “Stop Work Order”.” (emphasis added).

The e-mail dated 18.11.2013 from the Architect to Vistasik instructing Vistasik to act immediately as MBMB had made another inspection on that same day and found that there were still major outstanding site safety and cleaning works that have not been carried out. MBMB had given a final warning and will issue a Stop Work Order the next day.

The Architect’s letter dated 28.11.2013 to Vitasik to inform that Soh Teo Hock Construction have completed the premixing of the existing road (inclusive of roadside curb) to MBMB’s instructions, and the cost of the work shall be to Vistasik’s account. - The Parties’ Contentions & Findings of the Court [51] It is the Arbitrator’s finding that no Stop Work Order was ever issued by the local authority on 19.12.2013 or at any time afterwards and that “Since the architect in his letter dated 28 November 2013 make major remarks, and since the Claimant had paid for the work of the third party contractor, who had apparently completed the pre-mixing of the existing road inclusive of roadside curb in accordance with MBMB’s instructions, I hereby hold and rule that the first part of the first ground that there was “non-compliance with the MBMB instructions” is not made out.” (emphasis added; see paras 44 and 52 at pp 64 and 67 of the Award). [52] PSSB’s complaint was that the Arbitrator had proceeded on a wrong premise because it was not PSSB’s case that Vistasik’s delay resulted in a Stop Work Order being issued by MBMB. Rather, Vistasik’s failure to carry out the outstanding works required PSSB to appoint a third-party contractor to complete the works to prevent the issuance of a Stop Work Order. [53] PSSB submitted that the Arbitrator had ignored Vistasik’s admission in para 11 of its Reply to the Statement of Defence and Counter Claim that the work was behind schedule for the entire duration of the Contract and as borne out in 56 Site Meetings which were set out at para 181 of PSSB’s Submissions at the arbitration. Had the Arbitrator properly considered the evidence and authorities submitted, he would have found that Vistasik had, in its refusal to perform the outstanding works, coupled with delay and the other grouses, had failed to proceed regularly and diligently with the Works such that the PSSB’s determination of the Contract was valid and lawful. [54] In its submissions before the Court, apart from providing specific responses to each ground of challenge, Vistasik relied on several primary points which were universally applied and may be summarised as follows:

PSSB was attempting to re-open issues raised in the arbitration proceedings instead of assisting the Court by indicating the instances where the relevant subparas under s 37 of the AA 2005 are applicable;

contrary to PSSB’s contention that PSSB was unable to present its case, the Arbitrator had given equal and sufficient opportunities to both parties to present their respective case. Further, PSSB did not at any time raise such challenge or objection to the Arbitrator prior to the filing of the Setting Aside Application. This goes to show that PSSB’s arguments are mere afterthoughts; and

PSSB has failed and/ or neglected to state where, how and to what extent the Arbitrator had made decisions on matters falling beyond the scope or terms of the submission to arbitration. [55] In particular, it was Vistasik’s stand that, absent any issuance of a Stop Work Order by MBMB and “default of a serious nature” as required under Article 7 AoA and Clause 25.1(c) CoC, this is not a ground entitling PSSB to determine Vistasik’s employment. [56] Under Clause 25.1(c) CoC, PSSB may determine Vistasik’s employment if the latter fails to proceed regularly and/ or diligently with the Works. [57] In relation to PSSB’s contention that the Award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration because the finding made by the Arbitrator was not argued by any party, in my view, the issue surrounding MBMB’s site inspection and the threat of a looming Stop Work Order following which, the Architect gave certain instructions to Vistasik, were all pleaded and argued in the arbitration proceedings (see subparas 13(f) and (g) of the Defence and Counter Claim, para 13 of the Reply To Statement Of Defence, subpara 65(i) in Vistasik’s Written Submission, paras 159 - 163 in PSSB’s Submissions, para 23 of Vistasik’s Reply Submissions and para 71 of PSSB’s Reply). [58] In fact, in para 13 of the Reply To Statement Of Defence, Vistasik stated that at all material time, MBMB had not issued any order which prevented Vistasik to continue its works. In its Written Submission, Vistasik had referred to the evidence of PSSB’s witnesses i.e. RW1 and RW3 where the former had failed to substantiate his averment that there was a Stop Work Order issued on 19.11.2013. Vistasik’s stance is simply this: no Stop Work Order was issued by MBMB and hence, there was no non-compliance with MBMB’s instructions to justify PSSB’s action in putting an end to Vistasik’s employment. In any event, Soh Teo Hock Construction who carried out the road repair works in accordance with MBMB’s instructions was paid by Vistasik. [59] Since the Architect, in its letter dated 18.11.2013 to Vistasik, claimed that MBMB will issue a Stop Work Order on 19.11.2013, it is well within the Arbitrator’s jurisdiction to make a finding of fact that no Stop Work Order was ever issued by MBMB and a finding of law that only a default of a serious nature would entitle PSSB to determine Vistasik’s employment under Clause 25.1(c) of the CoC. These findings ultimately led the Arbitrator to “… hold and rule that the first part of the first ground that there was “non-compliance with the MBMB instructions” is not made out” in para 52, p 67 of the Award. [60] Moving on to the Natural Justice Point, this is similarly fallacious as PSSB was given the fullest opportunity to be heard as evidenced by its Defence and Counter Claim, Rejoinder (concerning the judgment of Cubic Electronics Sdn Bhd v Mars Telecommunications Sdn Bhd [2018] MLRAU 1), Submissions, Reply, Clarification and Clarification-

I agree with Vistasik’s submission that PSSB has not satisfied this Court of any breach to the rules of natural justice or that there was any injustice which had real effect and had prejudiced PSSB’s basic rights and where the upholding of the Award would shock the conscience, be clearly injurious to the public good or wholly offensive to the ordinary reasonable and fully informed member of the public as laid down in Jan De Nul’s case. [61] It is therefore my finding that there is no merit to PSSB’s Jurisdiction Point and Natural Justice Point. This ground of challenge is nothing but an attempt to attack the merits of the Arbitrator’s decision. 2nd Ground: Jurisdiction Point [subparas 37(1)(a)(iv) and 37(1)(a)(v) AA 2005] and Natural Justice Point [subpara 37(1)(b)(ii) AA 2005] – Alleged delay by PSSB in handing over of vacant possession of the site to Vistasik (Ground No. 3 in the Award) - The Parties’ Contentions [62] In the arbitration proceedings, Vistasik contended that PSSB had delayed in handing over vacant possession of the site due to the presence of Civil and Structural Engineering Services Sdn Bhd (‘CASES’), another contractor sharing possession of the site, and thus entitling Vistasik to an extension of time (‘EoT’). On the facts, Vistasik did submit its first application for EoT (‘EOT-1’) vide its letter dated 22.6.2012 to the Architect. [63] Mr. T. Kuhendran argued that the Arbitrator exceeded his jurisdiction and the reference to arbitration and had gone on a frolic of his own and re-written the express terms of the Contract by –

requiring PSSB to hand over full vacant possession instead of partial possession of the site as provided under the Contract. The Arbitrator had failed to make a distinction between handing over of “partial possession” and “vacant possession” of the site; and

allowing Vistasik’s entitlement to EoT simply from the Architect’s delay in processing Vistasik’s application for EOT-1. In ruling that Vistasik was entitled to EOT-1, the Arbitrator was said to have totally disregarded the evidence and the provisions of the Contract and went against fundamental principles of law amounting to patent and substantial injustice, and serious irregularity to PSSB which is manifestly unlawful and unconscionable. [64] Vistasik’s counsel responded that among the reasons which led to the application for EOT-1 was PSSB’s delay in the handing over of site possession due to the presence of CASES. Pursuant to Clause 23.1(b) CoC, the Architect has 28 days from the date of receipt of Vistasik’s letter to either accept or reject the application for EOT-1. However, the Architect failed to do so despite three reminders sent by Vistasik vide letters dated 13.9.2012, 13.10.2012 and 8.11.2012. The Architect replied only on 10.1.2013 granting an EoT of a total of 107 days with the revised completion date on 31.3.2013 even though Vistasik sought an EoT of 290 days (the total days for the 12 items as set out in the letter dated 22.6.2012 is 1,271 days and for delay in site possession, 63 days EoT was applied for) with the new date for completion falling on 30.9.2013. [65] Vistasik emphasised that the Arbitrator had considered the evidence and the parties’ submissions before he accepted Vistasik’s version of the events and that there was a delay in the handing over of vacant possession of the site by PSSB to Vistasik. - The Findings of the Court [66] The issue of PSSB’s purported delay in handing over vacant possession of the site to Vistasik and the application for EOT-1 were clearly raised and addressed in the pleadings and submissions of the parties in the arbitration (see paras 20, 24(i) and 29 SoC, paras 7, 8 and 21 - 23 in the Defence and Counterclaim, paras 3 and 22 - 24 in the Reply to Statement Of Defence, paras 51 - 54 in Vistasik’s Written Submission, paras 187 - 191 in PSSB’s Submissions and para 34 of Vistasik’s Reply Submissions). [67] Clause 3 in the LoA provides that: “3.

that there are contradictions in PSSB’s submissions; on one hand it contended that Vistasik must not only show that PSSB has delayed delivering possession of the site to Vistasik, but Vistasik must prove how that delay had held up the progress of its works. On the other hand, PSSB simultaneously states that there was no delivery of vacant possession under the Contract as it was contemplated that the site would be partially handed over to Vistasik. This second contention, said the Arbitrator, would “fly in the face of” Items 2 to 4 in the Appendix to the LoA and “Either the site was handed over to the Claimant, or it was not.”. If there was no handing over of the site to Vistasik, PSSB cannot claim that Vistasik had delayed its works. If there was partial handing over of the site, this means that no time had run against Vistasik;

that Clause 8 in the LoA expressly states that time is the essence in the Contract;

that the Architect displayed a lackadaisical attitude by making Vistasik wait for more than 6 months for permission to grant an EoT. This delay does not absolve the Architect or PSSB from taking the blame for the delay in handing over of the possession of the site; and

that “… the presence of CASES, the state of abandonment of the project, the change of design, the need to carry out strengthening and underpinning works; the Respondent’s argument that on the one hand that there was ‘no handing over vacant possession’, and on the other hand that there was only a ‘partial handing-over of the site’: drawing all these strings together, I am more inclined to believe the Claimant’s argument that there was a delay in the handing over of the vacant possession of the site as opposed to placing the blame entirely on the Claimant and relinquishing the respondent of all blame as to delay.”. [69] The Arbitrator did not rewrite the terms of the Contract as alleged by PSSB, but rather, he made a finding of mixed facts and law (involving the interpretation of the provisions in the LoA) with regards to Vistasik’s pleaded case that PSSB had delayed in handing over vacant possession of the site to Vistasik. [70] In my opinion, PSSB has not discharged the burden of proving Ground 2 whether in terms of the Jurisdiction Point and/ or the Natural Justice Point (for the same reasons as explained in respect of the 1st Ground). 3rd Ground: Jurisdiction Point [subparas 37(1)(a)(iv) and 37(1)(a)(v) AA 2005] and Natural Justice Point [subpara 37(1)(b)(ii) AA 2005] – Whether PSSB had failed or delayed in providing confirmations, drawings, layouts or plans (Ground No. 4 in the Award) [71] On 4.7.2012, Vistasik wrote to the Architect confirming that it was able to complete the whole works by 31.3.2013, which was the completion date granted by EOT-1, provided that the information, drawings and decisions be made available accordingly by the deadline indicated. The letter goes on to list 3 items under “Outstanding information to be confirmed by July 7,2012”, 12 items under “Outstanding construction drawings to be issued by July 15, 2012”, 8 items under “Nomination of sub-contractors by July 31, 2012”, 4 items under “Appointment of suppliers by July 31,2012” and 11 items under “Confirmation for Provisional Sums by July 31, 2012”. As observed by the Arbitrator in para 66 at p 148 of the Award, there is a total of 38 items which required the Architect’s confirmation. [72] Subsequently, Vistasik sent six reminders to the Architect until 12.10.2012 but no replies were received from the Architect. [73] At the arbitration, Vistasik took the position that the issuance of the Default Notice was substantially due to the Architect’s delay in providing the information etc. required by Vistasik to complete the Works. PSSB refuted this allegation. - The Parties’ Contentions [74] The Jurisdiction Point raised by PSSB was that the Award deals with an issue which was not contemplated or within the scope of submission to arbitration because in paras 9 - 19, pp 152 - 161 of the Award, the Arbitrator wrongly considered arguments advanced by PSSB on the issue of delivery of vacant possession of the site in addressing the issue of whether PSSB had failed or delayed in providing confirmation, drawings, layouts or plans. [75] PSSB also claimed that the Arbitrator had disregarded clear evidence elicited under cross-examination and documentary evidence and instead took great pains to look for inconsequential and insignificant evidence to redeem Vistasik’s case. In short, PSSB accused the Arbitrator of bias and this tantamount to a breach of natural justice. [76] By way of retort, Vistasik submitted that the Arbitrator had considered all evidence elicited in the arbitration proceedings and had substantiated his findings with thorough and elaborate reasoning. Mr. J. Chandra argued that PSSB was treating the Setting Aside Application as an appeal and opening issues which have been heard in its finality in the arbitration. - The Findings of the Court [77] The Jurisdiction Point can be dealt with swiftly. A scrutiny of paras 9 - 19 under “Respondent’s arguments” at pp 152 - 161 of the Award shows that these are similar to paras 14 - 28, also under “Respondent’s arguments”, at pp 109 - 113 of the Award relating to “Ground 3 – Employer’s Delay In Handing Over Vacant Possession”. However, in the “Analysis” part of the Award from paras 58 - 119 at pp 146 - 161, delivery of site vacant possession is not mentioned at all. This shows that the Arbitrator did not wrongly consider arguments advanced by PSSB on the issue of delivery of vacant possession of the site when determining Ground No. 4 in the Award as alleged by PSSB. [78] PSSB’s submission on the Natural Justice Point as to the alleged bias on the part of the Arbitrator by citing the example of delay in the painting works can similarly be addressed speedily. [79] Section 20 of the AA 2005 provides that “The parties shall be treated with equality and each party shall be given a fair and reasonable opportunity of presenting that party’s case.”. [80] Based on the Arbitrator’s analysis of the issue, he had meticulously considered the documentary evidence such as the correspondence and Site Meeting Minutes, the oral evidence especially by CW1 and RW3, the Architect’s silence for 6 months in not answering Vistasik’s queries and the fact that the Architect, Ar. Tony Khoo Heng Peng was never offered as a witness despite having filed a Witness Statement (the architect that was called as a witness i.e. RW3 was not a registered architect and claimed to be the “main person assisting the Architect”) before stating that “… apart from the information relating to paint, which I think was delayed by the Claimant, the other items in paragraph (A) were not in fact provided to the Claimant. The cross-examination of the CW-1 or that of the other witnesses do not throw sufficient light for me to come to an opposite conclusion that these confirmations had in fact been granted.” (emphasis added, para 111 at p 159 of the Award; “paragraph (A)” refers to “Outstanding information to be confirmed by July 7,2012” in Vistasik’s letter dated 4.7.2012. See too, para 100 at p 155 of the Award where the Arbitrator referred to Site Meeting Nos. 54 to 61 before he said that “So here is the evidence that Respondent’s counsel was right when he suggested that in so far as painting had been concerned, the Claimant had been guilty of serious delay.”). [81] This was followed with para 119 at p 161 of the Award where the Arbitrator clearly held and decided that “… Ground-4 is proven – save only to the exception that as far as painting work was concerned, the Claimant had been delayed.” (emphasis added). [82] As seen from these excerpts in the Award, the Arbitrator in fact agreed with PSSB that Vistasik was at fault for the delay in the painting works. [83] Furthermore, as will also be apparent in respect of the other grounds of challenge to follow where bias on the part of the arbitral tribunal is raised, PSSB has simply thrown in the argument of bias without citing any case authorities at all as to the legal principles and test to be applied and whether the test has been fulfilled in this case. This Court has observed that applicants desiring to set aside arbitral awards and adjudication decisions often hurl such allegations just because they were not successful in the arbitration or adjudication proceedings. The parties have often been reminded about the seriousness of accusations of this nature and unless these can be substantiated, such contentions should not be easily made. [84] PSSB additionally submitted that the Arbitrator ignored the evidence showing that there were no outstanding information or drawings to enable Vistasik to complete the Works by 30.8.2013 and any such delay was dealt in Vistasik’s application for EoT, namely –

para 55.1.5 in the Minutes of Site Meeting No. 54 / 55 held on 25.6.2013 and 2.7.2013 reported that “… there is no more outstanding drawings / information requested by contractors for their construction works, completion by 30th August, 2013”; and

para 14.1.2 of the Site Meeting No. 14 held on 10.1.2012 where, apart from the details of work progress for the apartment block, Vistasik reported the work progress for the hotel block, among others that: “ … - VSB was unable to proceed with the r.c. works for hotel block as the structural drawings for 16th floor and above were still put on hold. - VSB was unable to proceed with the light weight concrete block walls as the room matrix for the hotel block has not been confirmed. AKHP informed meeting that the CCM to be held on 13 January 2012 would determine / confirm the room matrix as well as the odium layout. AKHP would then be able to prepare detail construction drawings. - VESB was also unable to carry out hacking to the existing swimming pool deck structure without PESB’s E.I.”. PSSB asserted that the delay on RC works for the hotel block was dealt with in Vistasik’s application for EOT-1 dated 22.6.2012. [85] At the same time, the Arbitrator was said to have disregarded evidence of delay by Vistasik as shown in Progress Report No. 42 for the period from 23.3.2013 to 5.4.2013 where immediately after the extended completion date of 31.3.2013, work in respect of the podium car park at the first and second floor remained at 12% completion without any progress as compared to the previous report. [86] After having perused the part of the Award on the Arbitrator’s analysis on this matter, I find that he had mentioned Site Meeting No. 54 / 55 in footnote no. 46 at p 146 and in para 94 at p 154. In para 68 at p 148, when he remarked about Vistasik’s letter to the Architect dated 4.7.2012, he said that this letter was not referred to in any of the Site Meeting Minutes which have been produced before the tribunal. In my assessment, the Arbitrator was aware of the contents of the Minutes of the Site Meetings, including Site Meeting No. 54 / 55, and did take them into consideration. [87] Nevertheless, the Arbitrator made a finding of fact that there was outstanding information which had to be provided by PSSB to Vistasik at the material time. This finding was made after the Arbitrator had analysed the testimony of the witnesses and the documentary evidence. The issue as to Vistasik’s application for EOT-3 dated 16.8.2013 formed part of this analysis because in para 193 of PSSB’s Submissions, PSSB claimed that the information, drawings and/ or confirmations which were alleged to be due and particularised as one of the reasons for the application for EOT-3 could not be accurate in the light of para 55.1.5 in the Minutes of Site Meeting No. 54 / 55. [88] The Arbitrator examined the application for EOT-3 and noted that it refers to 17 items, the first of which is “confirmation of layout and type of sanitary fittings at ground floor toilet” and for which Vistasik applied for an EoT of 60 days. Ultimately, the Arbitrator held the Architect’s deafening silence to the legitimate queries by Vistasik vide the many letters, which were also sent to PSSB, the Quantity Surveyor (‘QS’) and the consultants, against PSSB. [89] In the circumstances, I am unable to accept PSSB’s contention that patent and substantial injustice has been occasioned due to the Arbitrator’s failure to properly consider the evidence before him. To the contrary, the Arbitrator had undertaken a detailed examination of the evidence and PSSB’s grievance is really that the outcome is not in its favour. 4th Ground: Jurisdiction Point [subparas 37(1)(a)(iv) and 37(1)(a)(v) AA 2005] and Natural Justice Point [subparas 37(1)(a)(vi) and 37(1)(b)(ii) AA 2005] – Whether there was delay by PSSB in the certification of payments and in making payment (Ground No. 5 in the Award) [90] In the arbitration proceedings, Vistasik argued that PSSB had delayed payments to Vistasik for Certificate Nos. 8, 9, 11, 12 and 13 (‘Said Certificates’) amounting to RM5,408,266.07. This caused financial difficulties to Vistasik and it was unable to pay the NSC. This in turn affected the confidence of the NSC in performing their duties and resulted in delay in the Works. [91] PSSB justified the withholding of payment for the Said Certificates by relying on Clause 37.4 CoC since Vistasik failed to provide the PB. Clause 37.4 CoC reads: “37.4 If the Contractor fails to provide or maintain the validity of the Performance Bond in accordance with this clause, then without prejudice to any other rights and remedies which the Employer may possess, the Employer shall be entitled to withhold or deduct an amount equal to the Performance Bond from any payment due or to become due to the Contractor.”. [92] The Arbitrator had considered the submissions of the parties and the oral and documentary evidence and concluded that –

he rejects PSSB’s explanation on the issue of whether there was a delay in the certification of payments and agrees with Vistasik that PSSB had breached the time-sensitive Clause 30 CoC (see para 61 at p 178 of the Award);

there was an unexplained delay in the certification of the progress claim and the main cause of this delay “must fall upon the broad and uncaring shoulders of the Architect” who was at all material times PSSB’s servant but who took his time with the progress claims submitted by Vistasik. The Arbitrator was clearly not impressed with the evidence of RW3 as he found his answers evasive and unreliable (see paras 59, 60 and 62 at p 178 of the

as there is no credible evidence in opposition and no evidence to contest that the delays did in fact occur or that the total number of days of delay was 1,347 days, PSSB had delayed payments of the certified sums to Vistasik (see para 82 at p 185 of the Award). - The Parties’ Contentions [93] PSSB’s complaints against the Award on this issue are as follows:

the Arbitrator had prematurely concluded in paras 64 to 67 at p 179 of the Award that there were mutual breaches, namely, PSSB’s failure to pay the Said Certificates on time vis-à-vis Vistasik’s failure to pay the required amount under the PB;

the Arbitrator’s decision in holding PSSB’s failure to demand for the PB in its counterclaim, against PSSB was perverse as the point regarding the PB was pleaded by PSSB as its defence against Vistasik’s allegation of delay in payments of the payment certificates;

the Arbitrator ignored evidence where the issue of the PB was pursued by PSSB or the QS, despite there being evidence of Vistasik’s attempt to secure the PB or for reduction of the amount of the PB;

Vistasik only pleaded delay in payment of the Said Certificates, however, the Arbitrator proceeded to make a finding that PSSB had delayed in paying Certificate No. 6 by 45 days and Certificate No. 7 by 64 days when there were no complaints by Vistasik on these two certificates in its pleaded case. The Arbitrator had therefore stepped outside of the pleaded case submitted to arbitration and within the contemplation of the parties by ruling on Certificate Nos. 6 and 7 without giving any opportunity to PSSB to present its position; and

the Natural Justice Point that the Arbitrator disregarded PSSB’s submission premised on documentary evidence, including Clause 37.4 CoC, that there was no issue of delay in the payment of the Said Certificates as these payments were deducted towards the PB which Vistasik had failed to furnish. The Arbitrator again displayed bias against PSSB when he did not take into consideration that PSSB had, at the request of Vistasik, agreed to release RM1,150,000.00 to Vistasik from the amounts retained for Certificates of Payments to ease Vistasik’s self-inflicted financial difficulties. [94] Vistasik’s counsel countered the above arguments by contending that whatever deductions of the PB by PSSB were made without Vistasik’s approval, authorisation and/ or consent. Furthermore, there was evidence of PSSB’s delay for payment of Certificate Nos. 6 and 7 based on the certificates which formed part of the bundle of documents submitted for arbitration and witnesses had testified to the same. Hence, the Arbitrator had rightly considered and included Certificate Nos. 6 and 7 in his final determination. - The Findings of the Court [95] After careful consideration of the averments and submissions by the parties, I had accepted PSSB’s argument as outlined in subpara 93(d) above for the following reasons:

It is Vistasik’s pleading that PSSB had failed to honour the Said Certificates (see para 37 of the SoC) and no mention is made of Certificate Nos. 6 and 7. PSSB’s Defence and Counterclaim (paras 30 - 34) and Vistasik’s Reply to Statement Of Defence (para 31 and subparas 31.1 - 31.3) similarly did not raise Certificate Nos. 6 and 7.

Reference to Certificate Nos. 6 and 7 first appeared in Vistasik’s Written Submission as re-produced below: “27. It is the Claimant’s submission that the Respondent had without approval, authorization, and/or consent, made deductions in respect of the Performance Bond from Certificates 6, 7, and 8, which were payments made towards progress claims by the subcontractors, as seen at Bundle J page 23, Column ‘Amount Payable’ and ‘Amount Received’.”. as well as in the following excerpts from PSSB’s Submissions: “210. The Claimant knew that the Respondent had withheld payment of RM50,000.00 from Certificate of Payment No. 6 as well as other deductions from Certificates of Payment No. 7, 8 and 9. This can be seen in the letter dated 15.6.2012 at page 49 of Bundle A. …

The Respondent did in fact assist the Claimant, despite jeopardising its own position. It agreed to release RM1,150,000.00 to the Claimant from the amounts retained by the Respondent from Certificates of Payment No. 6, 7, 8 and 9 (see page 49 of Bundle A). See also page 51 of same Bundle and pages 108-111 of Bundle R19.”. and Vistasik’s Reply Submissions: “40. In response to paragraph 208 of the Respondent’s Submissions, it is the Claimant’s submission that the Respondent did not make any deductions until the 6th certificate, and thereafter, the Respondent then made deductions in a non-progressive manner which caused cash flow problems to the Claimant as well as delayed the progress of works by the NSCs.

The Claimant denies paragraphs 209-213 of the Respondent’s Submissions and submits that for Certificates of Progress Payments No. 6, 7, 8, and 9, the amount that the Claimant had received were much lesser than the amount that was payable by the Respondent. Further, the Respondent released these payments much later than the date of receipt of the Certificate for Progress Payment, even up to 64 days. The table below, extracted from Bundle J page 23, refers. Cert. No Certificate Date Receipt Date Amount Payable Amount Received Difference Days To Collect 6 12.03.2012 25.04.2012 RM2,165,423.68 RM1,617,860.73 RM53,642.95 45 RM 493,920.00 7 18.04.2012 21.06.2012 RM 391,003.65 RM1,150,000.00 RM144,736.55 64 8 11.05.2012 RM 903,732.90 41 9 14.06.2012 - RM1,210,960.25 - RM1,210,960.25 - and finally, PSSB’s Reply: “3.5. The Respondent acted reasonably, conscious of the fact that the Claimant had financial obligations to its workers and sub-contractors. Hence it did not take any action until certificate of payment No.

It did not deduct the entire payment due under certificate of payment No. 6. It did deduct the entire payment under certificate of payment No. 7 and 8. This should not place any financial constraint on the Claimant as it is its obligation to furnish the performance bond even before the commencement of work. It should have furnished but did not. It cannot complain that the Respondent’s deductions placed it under financial strain. It was awarded the contract based on amongst others its financial strength.”. At the hearing of the Setting Aside Application, Vistasik submitted that the PB was supposed to be deducted by PSSB over the course of Certificate Nos. 1 to 27, however, PSSB had deducted the PB from Certificate Nos. 6 to 9, 16 and 17 in the total sum of RM3,123,376.00.

The Arbitrator opined that there was evidence that PSSB had delayed in making payments to Vistasik and a table setting out the number of days of delay in respect of each Certificate from Certificate No. 1 until Certificate No. 25 leading to a total number of 1,347 days of delay can be seen in para 79, p 183 of the Award. Although Certificate Nos. 6 and 7 were not pleaded by either or both parties, the Arbitrator nevertheless made a finding of fact in para 80, p 184 of the Award that PSSB had delayed in paying Certificate Nos. 6 and 7 by 45 days and 64 days, respectively. The Arbitrator then proceeded to take into account the said 45 days and 64 days in the computation of the number of days of delay in payment of the certified amounts which were found to be a total of 150 days, including 41 days for Certificate No. 8. This is what the Arbitrator said: “81. This delay of 150 days is telling. It seems to me that having deducted various sums of monies towards the Performance Bond on 21.06.2012, anything given to the Respondent was substantially delayed. This degree of tardiness is completely not in keeping with the various legal arguments advance by the Respondent.”. Judging by the table in para 79 of the Award, and apart from the 41 days delay for Certificate No. 8, there is no delay for Certificate No. 9 whilst for Certificate Nos. 11, 12 and 13, the Arbitrator apparently accepted that there were delays of 129 days, 64 days and 40 days, respectively.

In concluding at para 62, p 178 of the Award that there was an unexplained delay in the certification of the progress claim and at para 82, p 185 of the Award that PSSB had delayed payments of the certified sums to Vistasik, the Arbitrator did not explicitly state whether these conclusions are in respect of the Said Certificates as first pleaded by Vistasik in the SoC. Even assuming for a moment that the Arbitrator was justified in considering and determining on the issue of delay concerning Certificate Nos. 6 and 7 because of PSSB’s attempt to persuade the arbitral tribunal that any delays for Certificate Nos. 6, 7, 8, 9, 16 and 17 should not be taken into account as payments for these Certificates had been appropriated to the account of the PB under PSSB’s powers in Clause 37.4 CoC, this does not absolve the Arbitrator from the duty of deciding matters that had been submitted to him in the “pleadings” at the arbitration. These “pleadings” define the disputes between the parties and the extent of jurisdiction and submission to the jurisdiction of the Arbitrator [see Cairn Energy India’s case (supra) and Sigur Ros’s case (supra)]. This means that there must be clear findings as to whether there were delays in the payments for Certificate Nos. 9, 11, 12 and 13, failing which, this part of the Award is susceptible to being set aside under subpara 37(1)(a)(v) of the AA 2005. [96] In the premises, I find and hold that PSSB has discharged the burden of establishing the 4th Ground in the Setting Aside Application on a balance of probabilities. 5th Ground: Jurisdiction Point [subparas 37(1)(a)(iv) and 37(1)(a)(v) AA 2005] and Natural Justice Point [subparas 37(1)(a)(iii), 37(1)(a)(vi) and 37(1)(b)(ii) AA 2005] – Whether there was delay by PSSB in the appointment of NSC and the sub-contractors (Ground No. 6 in the Award) [97] In para 22 of the SoC, Vistasik referred to the Architect’s letter to PSSB dated 9.9.2011 which requires the mechanical and electrical (‘M&E’) works consisting of electrical and telephone service; ELV system; building automation system; fire protection system; hot and cold and sanitary plumbing services; and air-conditioning and mechanical ventilation system to commence on the dates as specified therein. Vistasik’s complaint was that PSSB had delayed in the appointment of the NSC for the M&E works and despite the reminder sent to PSSB on 17.1.2012, PSSB still did not appoint the NSC. Finally, PSSB requested that Vistasik appoint the subcontractors for the M&E works, which Vistasik did on 27.2.2012. [98] PSSB refuted this allegation and submitted that even if there was any such delay, the Architect has granted an EoT of 107 days up to 31.3.2013 in EOT-1. PSSB additionally made submissions regarding EOT-2 whereby an EoT of 152 days was granted to Vistasik (see paras 22 - 25 in the Defence and Counterclaim). PSSB asserted that any delay on its part on this matter did not prevent Vistasik from proceeding regularly and diligently with the Works. [99] In its Reply (see paras 23 - 26), Vistasik stated that the EOT-1 was granted for many other delays by PSSB and that the delay in the appointment of NSC was not compensable by the granting of 107 days extension via EOT-1. [100] Vistasik later went on to submit in its main and reply submissions that PSSB had specifically failed to appoint the NSC for stone works (Heritage Marble) and carpeting works (United Carpets) even until the determination of Vistasik’s employment. It was further submitted that PSSB’s averment that these NSC were not required was not supported with an Architect’s Instruction (‘AI’). [101] PSSB had a dedicated part on this matter in its written submission (paras 214 - 224) whereby it was contended that the M&E subcontractors were ready to be appointed on 19.12.2011 and in particular, for hot and cold and sanitary plumbing services, the nomination of AmFocus Plumbing Sdn Bhd was made on 15.2.2012; and for the ELV system and building automation system, the nomination instructions for the NSC were issued on 8.8.2012 and 30.11.2012. Any delay in the appointment of the M&E subcontractors was only in respect of their formal appointments and this was admitted by CW1 in cross-examination. The parties, the Architect and the QS were in communications in respect of Vistasik’s applications for EoT and the delay in the issuance of the official letters did not and should not have delayed the progress of the Works. [102] On the issue of the non-appointment of the NSC for stone works and carpeting works, PSSB submitted that no carpet works could be carried out until the water proofing and tiling works had been completed and these did not happen by the time the notice of determination was issued. - The Parties’ Contentions [103] PSSB’s grievance lies in the Arbitrator’s finding that there was delay in the appointment of the NSC and held this against PSSB despite the admission by CW1 during cross examination that any such delay was compensated by the granting of EOT-2 by the Architect, as applied by Vistasik. [104] PSSB challenged the Award on the Jurisdiction Point that the Arbitrator embarked on an evaluation of other evidence which were not raised by Vistasik in its submissions and that there is patent and substantial injustice as the Arbitrator failed to properly consider the evidence and authorities submitted. [105] As for the Natural Justice Point, PSSB argued that in the circumstances, PSSB should have been given an opportunity to rebut or to make further submissions. The allegation of the Arbitrator’s bias in favour of Vistasik was again raised here. [106] Vistasik maintained its stance that there was delay in the appointment of the NSC and this resulted in the delay of the Works and eventually the application for EOT-2, followed by the application for EOT-3. All matters pertaining to this issue are said to have been dealt with by the Arbitrator in its finality and PSSB was attempting to re-open the issues in the current application. - The Findings of the Court [107] Firstly, with regards to PSSB’s contention that CW1 had, during cross examination, admitted that any delay in the appointment of NSC by PSSB was compensated by the granting of EOT-2, a scrutiny of the Notes of Evidence relied upon by PSSB at p 9171, encl. 30 shows that CW1 had only admitted to the following facts:

that there were two grounds for the application for EOT-2 and that both grounds relate to the appointment of the NSC;

that Vistasik need 152 days to complete the Works but it was not granted the full 152 days; and

that the Architect stated in his letter that, in respect of the application for EOT-2, it would be the last and final EoT and Vistasik did not protest this letter. There is no admission by CW1 that the delay of the appointment of the NSC had been adequately compensated by the granting of EOT-2. [108] In yet another detailed examination of the oral and documentary evidence by the Arbitrator, he had, in para 68, p 202 of the Award, noted that CW1 agreed that Vistasik was granted 152 days of EOT-2. [109] Secondly, PSSB’s argument on the sequence of works and that the purported delay in the appointment of the NSC for carpeting works had no impact on the progress of the Works since the water proofing and tiling works have not been completed at the material time, this was dealt with by the Arbitrator in his analysis of RW3’s evidence whereupon –

RW3’s answer that the appointment of a NSC for carpet works and marble and stone works was also an issue faced by Vistasik, is an indication of delay by PSSB (para 73, p 203 of the Award); and

the Arbitrator was not convinced by RW3’s answer in the negative to the question of whether stone works fell on the critical path. The Arbitrator reasoned that if the stone works was not critical, why did Esamegah Sdn Bhd (‘Esamegah’), the contractor who was appointed to complete the Project, apply for EoT of 120 days on 7.7.2014 in respect of the stone works and carpeting works, to which PSSB had allowed the application (paras 77 - 84, p 204 - 205 of the Award). [110] Thirdly, PSSB contended that the Arbitrator had evaluated “other evidence” which were not raised by the parties in their submissions. This “other evidence” consists of Vistasik’s applications for EOT-1 to EOT-3 and the documents related thereto as the Arbitrator strived to find the answer to PSSB’s contention that the grant of EOT-2 had solved the NSC related issues. After having meticulously considered the documentary evidence, the arbitral tribunal answered the poser in the negative because he was inclined to believe Vistasik’s version of the events that there had in fact been a delay in the appointment of the NSC (see paras 136 and 145 at pp 217 and 219 of the Award, respectively). [111] In the premises, I find that the Jurisdiction Point and the Natural Justice Point as submitted to this Court are unmeritorious. It is purely an attempt to “re-arbitrate” the matter. 6th Ground: Jurisdiction Point [subparas 37(1)(a)(iv) and 37(1)(a)(v) AA 2005] and Natural Justice Point [subparas 37(1)(a)(vi) and 37(1)(b)(ii) AA 2005] – Whether PSSB failed to address ironmongeries for the doors in the apartment blocks (Ground No. 7 in the Award) - The Parties’ Contentions [112] The crux of Vistasik’s case in the arbitration proceedings was that PSSB had failed to address the works relating to ironmongeries for doors in the apartment block and consequently, this caused Vistasik to incur additional cost and delay due to the irregular nature of work sequencing (see subpara24(ii) in the SoC). [113] PSSB’s defence was similar to the one relied upon for the issue under the 5th Ground as just discussed, namely that this delay event had been considered and covered in the grant of EOT-1. [114] In this Court, PSSB submitted a long list of complaints against the Award in an attempt to set it aside and they are as follows:

Jurisdiction Point EOT-1 was not one of the issues agreed by the parties for the determination of the tribunal but yet, the Arbitrator found that the Architect’s grant of EOT-1 was at fault. In doing so, the Arbitrator had acted in excess of his jurisdiction.

Natural Justice Point The arbitral procedure was not in accordance with the agreement of the parties and the Award is in conflict with public policy due to a breach of the rules of natural justice as the Arbitrator failed to consider PSSB’s position and points of argument. There is patent and substantial in justice because the Arbitrator failed to properly consider the evidence and authorities submitted. In particular –

the Arbitrator found that PSSB had failed to address the ironmongeries for the doors and thereby delayed Vistasik despite CW1’s evidence during cross examination that Vistasik could “come back later” and re-mobilised its workers. Such failure to address the ironmongeries did not occasion the delay in the works by Vistasik and even if there was delay, there was no evidence as to how the delay affected the Works;

(ii) the Arbitrator failed to consider and make a determination on PSSB’s argument on the delay in the Light Weight Concrete (‘LWC’) issue i.e. that it was not considered as a critical path in the work progress. This delay by PSSB did not occasion the delay in Vistasik’s works;

(iii) the Arbitrator was selective in the evaluation of the evidence pertaining to AI No. 46 dated 11.11.2013 vis-á- vis the Defendant’s failure to attend and complete the water proofing works;

(iv) the Arbitrator was adamant to decide on whether PSSB had interfered with Vistasik’s work although this was not pleaded. The Arbitrator was also quick to conclude that the interference in the NSC meetings based on manuscripted notes in the Minutes of Site Meeting No. 73 amounts to an interference in Vistasik’s work by PSSB. The Arbitrator cherry picked the evidence to support his preconceived judgment and ignored that these manuscripted notes were never part of the approved minutes and that Vistasik, during its case, did not touch on the issue of the manuscript notes not being part of the approved minutes. The Arbitrator ignored PSSB’s submissions that taking over the meeting, at best, was an interference with the meeting but would not amount to any interference of Vistasik’s works as, at the material time, there were no works in the first place; and

the Arbitrator was most willing to accept all allegations by Vistasik against PSSB or the Architect but was oblivious to the admission by CW1 that the work practically stood still at the material time and it was contributed largely due to lack of manpower as a result of the frequent raids by the authorities on the workers’ quarters. [115] Vistasik’s response to the above contentions was that the issue of “Failure to address ironmongeries for door in apartment block” was clearly addressed in PSSB’s Submissions before the arbitral tribunal (at paras 225 - 230). PSSB referred to Site Meeting Nos. 7, 11, 12, 13, 30 and 31 where the matter on ironmongeries were discussed and was no longer an issue at Site Meeting No. 31. PSSB’s stance was the delay, if any, in the completion of the door frames were addressed in Vistasik’s application for EOT-1. The Arbitrator had relied on the testimony of the witnesses and the submissions of the parties in arriving at his decision. - The Findings of the Court [116] The Amended List of Issues To Be Tried (‘ITBT’) which was filed with the arbitral tribunal can be seen at para 2, pp 29 - 33 of the Award. Whilst it is true that Vistasik’s application for EOT-1 was not expressly listed as one of the ITBT, nevertheless, it was PSSB that pleaded the matters raised by Vistasik in its letter dated 19.12.2011 to the Architect had been considered and covered by EOT-1 by way of PSSB’s reply to Vistasik’s statement that this letter had mentioned, among others, regarding PSSB’s failure to address the ironmongeries for the doors in the apartment block resulting in Vistasik being not able to put up the LWC block walls. In short, the sufficiency of EOT-1 was PSSB’s defence to Vistasik’s allegation on the ironmongeries issue. [117] PSSB’s position was further accentuated in its Submissions before the arbitral tribunal as alluded to earlier. It is therefore well within the Arbitrator’s jurisdiction to consider PSSB’s defence which was finally rejected by the Arbitrator on the grounds that –

the minutes of the Site Meeting Nos. 7, 10, 12 to 14, 45 - 48 and 50 - 52, which were examined by the Arbitrator as apparent in paras 15 - 37 at pp 224 - 228 of the Award, show that “… ironmongeries was clearly recorded to have been delayed.” and PSSB’s assertion that certain Site Meetings had addressed and resolved the issues relating to ironmongeries “… is difficult to reconcile with the chronology.”;

the Site Meeting Nos. 12 and 13 took place after Vistasik’s application for EOT-1 on 22.6.2012; and

Vistasik’s letters dated 19.12.2011, 9.4.2012 and 4.7.2012 and its request for EOT-1 supported Vistasik’s account of the events and the Arbitrator was persuaded to accept Vistasik’s arguments rather than PSSB’s. [118] It is observed that three of PSSB’s grounds of challenge premised on the Natural Justice Point cut across the other grounds which were dealt with in the Award, namely “Ground 8 – Lightweight Concrete Block (LWC) And Delay”, “Ground 9: Whether There Were Problems With The Waterproofing System” and “Ground No. 10 – Respondent’s Interference In The Work Of The Claimant”. [119] The issue on whether PSSB had interfered with Vistasik’s work will be discussed under the 7th Ground in the ensuing part of this judgment. [120] As for PSSB’s claim that the Arbitrator failed to consider and make a determination on its argument that the delay in the LWC was not considered as a critical path in the work progress and ought not to cause delay in Vistasik’s works, a perusal of Chapter 12 in the Award on Ground 8 (pp 238 - 254) dispels PSSB’s contention altogether. In the Arbitrator’s analysis, he did deal with PSSB’s argument that “… the Site Meeting Minutes indicate that the claimant would have been able to carry on its work without the LWC” and “There are so many other areas in which the claimant could work or deploy its resources and workers.”. Finally, the Arbitrator opined that “Having regard to these documents, I am unable to accept the argument of the respondent. The documents all point to the fact that there had been a delay on the part of the respondent on the issue of … (LWC) …”. Clearly, the Arbitrator has made yet another finding of fact based on his assessment of the evidence. [121] Moving next to PSSB’s submission that the Arbitrator was selective in the evaluation of the evidence pertaining to AI No. 46, by which the Defendant was instructed to expedite waterproofing works with an increased workforce as further delay would affect the works of other trades, this calls for an examination of Chapter 13 in the Award on Ground 9 (pp 255 - 281). Having done that, and PSSB, in not demonstrating in what manner the Arbitrator is said to have been selective in his evaluation of the evidence, which typically comprised of both oral and documentary evidence, it is my opinion that PSSB’s argument rings hollow indeed. In the concluding part of his analysis, the Arbitrator found, among others, that AI No. 46 had become redundant, that PSSB had appointed a third party to do the waterproofing works and exercised its right to set-off and that PSSB was not justified in its allegations of delay in the waterproofing works to the hotel bathrooms to entitle it to issue a Notice of Default to Vistasik. [122] In the premises, I am not persuaded that the Jurisdiction Point and any of PSSB’s Natural Justice Point have been established on a balance of probabilities. 7th Ground: Jurisdiction Point [subparas 37(1)(a)(iv) and 37(1)(a)(v) AA 2005] and Natural Justice Point [subparas 37(1)(a)(iii), 37(1)(a)(vi) and 37(1)(b)(ii) AA 2005] – Whether PSSB had interfered in Vistasik’s Works (Ground No. 7 in the Award) - The Parties’ Contentions & the Court’s Findings [123] PSSB’s contentions have been outlined in subpara 114(b)(iv) above. There is no dispute that the complaint regarding PSSB’s purported interference in Vistasik’s work was not pleaded and that the issue was raised only during the cross-examination of PSSB’s witnesses. [124] It is for this reason that PSSB now contends that the Award deals with an issue which was not contemplated by or not falling within the terms of the submission to arbitration and the Award contains decisions on matters beyond the scope of the submission to arbitration (Jurisdiction Point). It was additionally argued that the Award is in conflict with public policy because of breach of the rules of natural justice as PSSB was not afforded an opportunity to submit on the alleged interference and the applicability of the legal principles in the case of KEP Mohamed Ali v KEP Mohamed Ismail [1981] 2 MLJ 10, which was referred to by the Arbitrator in paras 25 and 26, pp 288 - 289 of the Award (Natural Justice Point). [125] The alleged interference can be gathered from the written submissions of the parties before the arbitral tribunal and from the Award. [126] In para 70 of Vistasik’s Written Submission, it was submitted that the works had been proceeding regularly and diligently and that the Notice of Default issued by the Architect on 20.11.2013 was issued in bad faith and after PSSB had interfered in the work that Vistasik was carrying out. [127] PSSB’s submission in paras 237 - 240 sought to explain the two events of alleged interference, namely –

PSSB had asked Vistasik’s site staff to leave Site Meeting No. 73 on 29.10.2013 as reported in the handwritten notes to the Minutes of the said Meeting. Based on RW3’s evidence, he had written the notes on the Minutes for Site Meeting No. 73 when the Minutes were brought up for confirmation and verification at Site Meeting No. 74 on 12.11.2013. The notes (with my added emphasis) as quoted in para 20, pp 286 - 287 of the Award read as follows: “– All contractors were reminded [arrow sign] site housekeeping hoarding repairing/stockpile at road site [sic]. – Joint management committee. Grievances by VSB (the Claimant) – Interfering by PSSB (Respondent) in yesterday [sic] NSC meeting – Requested VSB site staff to leave meeting Gan (PSSB) (the Respondent) has taken over the meeting – Sunday: Bar [presumably, “barred”] VSB staff from taking care of … [Words hidden by partial photocopying] – Reviewing works but instruction [next few words] not implemented/down to Tuesday fifth November_ – Second raided of [sic] 7100 workers/reported on Friday eight November … NSC to look-up immigration might be raided – JC [presumably the “joint committee” proposed by the Claimant] not firmed up – Checking with Bomba, lever lock set requirement to elses. Shaft, KHP to CFM in writing – VSB expressed their willingness to continuing to fin [presumably “to finish”] under the Main cont [presumably “contract”]. – Security taking visit by PSSB – VSB informed facing handicap situation due to latest raiding – Site personnel being band [presumably, “banned”] – DK QS to look at contractual obligation – Determination of contract by VSB”. PSSB argued that taking over the Site Meeting could amount to an interference of the Meeting but it did not and could not have interfered with Vistasik’s work as there were no works to interfere with in the first place; and

when RW5 prepared and handed a List of Outstanding Works to the Architect. Vistasik claimed that this is meddling in the Project as the preparation of such a List was within the scope of Vistasik’s work. [128] The Arbitrator recognised that a matter which is not pleaded cannot be raised by Vistasik in the claim. However, he relied on the following excerpt in the judgment of the Supreme Court in KEP Mohamed Ali (supra, at pp 11 -12) in deciding that “… these points were developed in the course of post-hearing submissions … some of these statements become relevant for my consideration”: “In the present case, the material facts relating to the acknowledgment was not pleaded in the statement of claim; it was also not pleaded in the reply apart from stating that the law of limitation does not apply to the present action. That in our opinion is bad pleading. But it is a matter of indifference to the court whether the plea of acknowledgment is pleaded in the statement of claim or in the reply. If it is raised in the statement of claim, it would make a reply unnecessary and so reduce costs. A further advantage of pleading an acknowledgment in the statement of claim is that the defendant may thereby be led to refrain from raising the issue of limitation in the defence, thus narrowing the area of discovery and reducing costs: see Bullen & Leake (12th edition) at page 638. Since the material facts and circumstances were not pleaded in the statement of claim, it should have been pleaded in the reply. Be that as it may, this aspect of the case has been satisfactorily presented and developed in the proceedings before the High Court and we think there are materials on the record from which a decision to that effect could be arrived at. As one of the objects of modern pleadings is to prevent surprise, we cannot for one moment think that the defendant was taken by surprise. To condemn a party on a ground of which no material facts have been pleaded may be as great a denial of justice as to condemn him on a ground on which his evidence has been improperly excluded.”. [129] A further reading of the Award shows that the Arbitrator placed emphasis on two dates, the Default Notice which was sent on 20.11.2013, eight days after Site Meeting No. 74 and the Determination Notice dated 12.12.2013. It is apparent from the Arbitrator’s analysis of the evidence given by RW1, RW2 and RW3 that, to him, the alleged interferences are not free-standing issues but are linked to the question of the bona fides and validity of the Determination Notice. Based on the oral and documentary evidence, the Arbitrator deduced that: “22. These handwritten comments imply that someone who wrote these notes seem to have known as early as the 73rd Site Meeting on 29 October 2013 that the Claimant would be terminated, an event that did not occur until 12 December 2013. The minutes Site Meeting No. 73 indicate that Mr. TD Gan had attended on behalf of the Respondent, PSSB.

During his cross-examination on 12 June 2018, RW-3, the architect’s assistant, Mr. Koo, confirmed that the handwriting was his. …

Since Mr. Gan had taken control of the site after Site Meeting No. 73 on 29 October 2013, it is surprising that the same set of words are repeated at page 82 in Site Meeting No. 75 above paragraph 75.1.2 – if anything this was identical to the paragraph 74.1.1 at page 70 1 at R5, p.71.

This means that the Respondent knew from as far back as Site Meeting No. 73, and afterwards number 75 that Eden Hybrid, or Esamegah as it was known after 18 November 2013 - was ‘already in the picture’ and that the Respondent must have intended to determine the Claimant as early as 29th of October 2013.”. [130] Since the issue as to whether Vistasik’s Contract was determined validly is the first question in the ITBT, and the allegation of PSSB’s interference in Vistasik’s work is connected to this issue, I am unable to agree with PSSB’s submissions on the Jurisdiction Point. [131] As regards the Arbitrator’s reliance on KEP Mohamed Ali’s case without inviting the parties to submit on the same, Mr. J. Chandra had rightfully submitted that an Arbitrator, like a Judge, has every right to cite any authority that may aid him or her in coming to a decision. In this case, the parties were well aware of the line of questioning during the oral evidence of PSSB’s witnesses on the point as to alleged interference and the written submissions by both parties included this aspect. The failure to ask for further submissions from the parties regarding the applicability of KEP Mohamed Ali’s case does not fulfil the test as laid down in Jan De Nul to warrant the setting aside of the entire Award. [132] Even if there is a breach of the rules of natural justice in connection with the making of the Award, such breach is, in my view, relatively immaterial or is not likely to have affected the outcome of the arbitral proceedings (see Master Mulia). After all, Vistasik had put forth 13 grounds to support its stance that PSSB’s determination of Vistasik’s employment was invalid and as elaborated earlier, the issue of PSSB’s interference in Vistasik’s works was not one of the major grounds but rather, it was a subset of the overall argument that PSSB had wrongfully determined Vistasik’s employment. [133] Based on the above reasons, I am not convinced that PSSB has established its case premised on either the Jurisdiction Point or the Natural Justice Point. 8th Ground: Natural Justice Point [subparas 37(1)(b)(ii)) AA 2005] – Whether there had been direct payments by PSSB to NSC and DSC and this caused Vistasik to have little or no control over the NSC (Ground No. 13 in the Award) - The Parties’ Contentions [134] For the 8th Ground, PSSB relied only on a single Natural Justice Point i.e. that the Arbitrator had disregarded PSSB’s evidence and submissions in arriving at his decision and this amounts to a breach of natural justice and goes against public policy. [135] Vistasik had argued before the arbitral tribunal that it had lost control over the site because PSSB had made payments directly to the NSC and DSC to the extent that Vistasik lost control of the NSC and DSC and its progress of work was prejudiced. [136] In this Court, Mr. T. Kuhendran submitted that the Arbitrator had agreed with Vistasik’s stance even though there was no evidence at all to support the alleged loss of control by reason of these direct payments. The Arbitrator was said to have ignored –

documentary evidence consisting of Site Meeting Nos. 33 and 34 and Vistasik’s letters to PSSB dated 6.3.2012, 21.11.2012,

14.12.2012, 3.1.2013 and 29.1.2013 showing that the direct payments were consented to by Vistasik; and

PSSB’s submissions at para 267 of its Submissions that direct payments by PSSB to the NSC and sub-contractors ought to expedite the progress of work and not the contrary. [137] To dispel PSSB’s contentions, Mr. J. Chandra submitted at length as to what had transpired during the hearing in the arbitration proceedings viz. –

the QS (RW2) was called as PSSB’s witness to testify on the Final Account. However, there were three continued hearing dates that were not completed due to RW2’s inability to finish his evidence allegedly due to anxiety and stress as stated in the Medical Certificate dated 15.5.2018 which was submitted to the arbitral tribunal. As a result, RW6 was called as a replacement witness for RW2;

RW6’s evidence in respect of the Final Account contradicted RW2’s evidence because in his Witness Statement, RW2 stated that the Final Account was prepared solely by him. However, RW6 in his Witness Statement stated that both RW2 and RW6 were involved in the compilation and preparation of the Draft

one Lilian Wong, whose name was stated in the Site Meetings on numerous occasions, was not called as a witness. When RW6 was questioned as to why Lilian was not called, he said that it was because she was RW2’s and RW3’s boss;

the Arbitrator held that RW6 had no knowledge of the Project as he was appointed after Vistasik was determined and Lilian should have been called as a witness; and

the fact that had been alluded to earlier about RW3 being called as a witness instead of the Architect who was in charge of the Project. [138] Vistasik maintained that this issue was clearly pleaded and/ or raised in the parties’ respective submissions and/ or vide the testimony of the witnesses during the arbitration proceedings and PSSB was attempting to use the court proceedings as a platform to appeal against the Award. - The Findings of the Court [139] I have scrutinised Chapter 17 in the Award where the Arbitrator dealt with Ground No. 13 in determining whether PSSB’s claims that the Arbitrator had disregarded certain documentary evidence is true. These are my findings:

the Arbitrator had made reference to Site Meeting No. 33 at paras 10 - 13, p 321 of the Award and the statement therein that Vistasik consented to direct payment to NSC/Sub-Contractor;

the Arbitrator similarly referred to Site Meeting No. 34 at paras 19 - 21, p 323 of the Award and the same statement therein that Vistasik consented to direct payment to NSC/Sub-Contractor;

Vistasik’s letter dated 6.3.2012 to PSSB requesting PSSB to make payment of the 15% non-refundable down payment to MS Elevators Engineering Sdn Bhd to enable them to start to fabricate the lift equipment and that the amount will be set off against Vistasik’s Progress Certificate No. 6 is not mentioned in the Award. However, this omission would not make a difference to the Arbitrator’s findings and conclusions as this is one of several letters sent at the material time, which were considered by the Arbitrator, where Vistasik gave written consent for direct payments to be made by PSSB to the NSC and sub-contractors;

the Arbitrator had referred to Vistasik’s letters dated 21.11.2012,

14.12.2012 and 3.1.2013 to PSSB giving consent for PSSB to make payments directly to several sub-contractors and that such payments shall be deemed as payments received by Vistasik in respect of Certificate Nos. 14 and 15 (see paras 30 - 32, pp 326 - 327 of the Award);

the Arbitrator had referred to Vistasik’s letter dated 29.1.2013 at para 47, p 30 of the Award wherein Vistasik consented to PSSB making payments directly to the NSC and sub-contractors; and

although the Arbitrator did not expressly mention para 267 of PSSB’s Submissions or the contention therein that direct payments by PSSB to the NSC and sub-contractors ought to have expedited the progress of work, the Arbitrator did reject PSSB’s arguments (see para 98, p 343 of the Award) as he had considered the oral and documentary evidence and made the following findings of fact (see paras 72 - 80, pp 337 - 338 of the

there is no provision in the Contract for PSSB to pay any monies directly to any NSC or DSC. This is why PSSB adopted a procedure by which Vistasik’s permission was sought before PSSB would release any payment directly to the NSC and DSC;

(ii) whenever Vistasik gave written permission, PSSB did release such payments directly to the NSC and DSC;

(iii) there were instances when PSSB released monies directly to the NSC even before Vistasik had any opportunity to consent to such payment;

(iv) subsequently, Vistasik withdrew its consent for any monies to be paid directly to the NSC and DSC. However, PSSB continued to pay monies directly to the NSC and DSC. Whether intentionally or otherwise, this conduct had caused the NSC and DSC to lose their confidence in Vistasik to the extent of ignoring Vistasik totally. This resulted in Vistasik losing control over the NSC and DSC. It was inferred that an NSC or DSC will always take the side of the person who is a paymaster, namely PSSB, as opposed to a taskmaster; and

any “crisis of evidence” that the NSC and DSC had entertained, emanated directly from PSSB’s conduct in paying them directly, and cutting off any control Vistasik could have exercised over them. [140] In para 80, p 338 of the Award, the Arbitrator found that there are grounds for him to conclude that PSSB’s conduct had caused Vistasik to have suffered a loss of control at site. Even if there was any error on the part of the Arbitrator in his findings of facts which led to this conclusion, this is not a valid ground to set aside the Award. [141] Furthermore, the fact that the Arbitrator had given due weight to PSSB’s position on this issue is borne out by, among others, para 81, p 338 of the Award where the Arbitrator accepted PSSB’s contentions that Vistasik was facing financial difficulties and suffered from a deficit of confidence among the NSC and that Vistasik was struggling to provide the PB. [142] Based on the foregoing considerations, I am of the opinion that PSSB has not established the Natural Justice Point on a balance of probabilities. PSSB is naturally unhappy with the Award and is attempting all avenues to set aside the same, including alleging that the Arbitrator had ignored evidence and submissions when such assertion is unjustified. 9th Ground: Natural Justice Point [subparas 37(1)(b)(ii)) AA 2005] – Vistasik’s claim for Interim Valuation No. 27 in the sum of RM7,258,139.28 (Quantum 3 in the Award) - The Parties’ Contentions [143] For the 9th Ground, PSSB had also relied on one Natural Justice Point, this time premised on the contention that the Arbitrator had disregarded the evidence and contractual provisions by accepting the QS’s Valuation No. 27 (‘VN 27’) in awarding the claim of RM7,258,139.28 whereas VN 27 had been superseded by the Final Account prepared by the same QS. The Final Account was, however, subsequently rejected by the Arbitrator. PSSB asserted that VN 27 is contractually subject to re-measurement of works, materials on site which were not incorporated into the works and rectification costs for defects upon completion of the Contract. [144] PSSB criticised the Arbitrator’s decision in accepting the explanation by CW1 on Vistasik’s arithmetical basis for VN 27 even though –

during the cross-examination, CW1 agreed that his calculation was not prepared by a QS, and with regards to the Final Account, there was consistency upon taking into account re-measurement upon completion of works, materials on site and rectification costs; and

it was proven that his evidence in chief that Vistasik had, at the determination of the Contract, completed 87% of the works was erroneous. The actual percentage of work done was shown to be at 76.7% after reconciliation of VN 27 and the Final Account and this percentage was consistent with Vistasik’s Progress Report No. 57. Although the Arbitrator addressed this anomaly of CW1’s evidence in chief, there was no finding on this significant evidence despite there being no challenge to this matter by Vistasik in the re-examination of CW1 and its submissions in reply as compared to the extensive submissions made by PSSB’s counsel. Instead, the Arbitrator found that PSSB’s counsel did not, in re-examination of RW3, challenge the inference as was made by the Arbitrator that the reason for the non-issuance of the payment certificate for VN 27 is that the Architect and the QS had got wind of the fact that PSSB had resolved to terminate the Contract. PSSB argued that this inference is insignificant by reason of the interim nature of VN 27 which was subsequently reconciled in the Final Account. [145] It was additionally contended by PSSB that in concluding that an employer cannot deduct a sum of money towards the PB in installments, the Arbitrator had failed to appreciate that in most instances it would be almost impossible to deduct a sum of money towards the PB in one single transaction and that most interim payments due to a contractor would be lesser than the PB. Further, PSSB did not deduct the entire amount of the certified sum so that the balance could be paid to Vistasik. [146] Vistasik’s response to the above is simply that PSSB’s submissions is as though the Setting Aside Application is an appeal and the Court is being drawn into the merits of the case. In any event, Vistasik submitted that there was no breach of natural justice as the Arbitrator had duly considered all the oral and documentary evidence and submissions of the parties before he decided to reject PSSB’s reasons in imploring him to deny Vistasik’s claim under VN 27. - The Findings of the Court [147] In its pleadings, Vistasik claimed that RM7,258,139.28 should be paid by PSSB as confirmed by the QS’s Certificate of Payment dated 5.12.2013 whereby the QS took into account all works done up to that date, which is prior to the determination of the Contract. Vistasik argued that the Architect had failed, neglected and/ or refused to issue a Certificate of Recommendation for Progress Payment because PSSB had, by then, decided to terminate the Contract. PSSB denied that this sum is owing to Vistasik (see para 15 in the SoC, paras 15 and 16 of the Defence and paras 19 and 20 of the Reply). [148] In Chapter 23 of the Award (pp 365 - 371), the Arbitrator alluded to the parties’ pleadings and arguments and dedicated a major part of his analysis to RW3’s evidence before inferring that “… the reason no payment of certificate had been issued for Valuation No. 27 was because the Quantity Surveyor and the architect had got wind of the fact that the Employer had been resolved to terminate the Contract of the Claimant three weeks before 12 December 2013. This would explain why despite the fact that on 5 December 2013, the quantity surveyor had calculated the value of the works carried out by the Claimant as being RM7,258,139.28, the architect had not issued a certificate of payment.”. [149] In awarding the sum of RM7,258,139.28 for Valuation Certificate No. 27 dated 15.12.2013, the Arbitrator was satisfied that Vistasik did this quantum of work. He found that, on a proper interpretation of Clause 30.1 CoC, the Architect ought to have certified the said Certificate within 21 days of the receipt of Vistasik’s application. The Architect did not do so and no valid reason was given for his inaction. The Arbitrator additionally found that all arguments concerning lack of quality of work, of waterproofing or of water tightness, all of which had been taken over by Esamegah, did not present any valid reasons for PSSB to withhold the payment to Vistasik (see paras 20 and 29 - 30 of the Award). [150] More discussions on VN 27 can be found in Chapter 28 of the Award where the Arbitrator dealt with the issue of PSSB’s counterclaim which necessarily involved a closer examination of the Final Account (see specifically paras 112 - 117 on the question of “What is the difference in the value of the Work Done and Valuation No. 27 as against Value of Work Done recorded in Final Account”; the comparison between the value of work done in Valuation No. 27 as against value of work done as stated in the Final Account at paras 118 – 140; and the issue as to whether the negative variance of RM10,804,098.18 between VN 27 and the actual work done in the purported Final Account is not a manifest error at paras 190 - 196; all references can be seen at pp 437 - 446 and 458 - 460). [151] In so far as the Final Account is concerned, as will be demonstrated in the discussion below relating to the 11th Ground, the Arbitrator was unable to accept the veracity of the documents which PSSB claimed is the Final Account and hence, he determined that the Final Account is not conclusive. In view of this determination, PSSB’s argument in this Court that there has been a breach of natural justice because the Arbitrator disregarded evidence and the contractual provision that VN 27 had been superseded by the Final Account is untenable. [152] I find and hold that PSSB has not established the Natural Justice Point in relation to this issue so as to warrant the Award to be set aside. 10th Ground: Jurisdiction Point [subparas 37(1)(a)(iv) and 37(1)(a)(v) AA 2005] and Natural Justice Point [subpara 37(1)(b)(ii) AA 2005] – Whether PSSB is entitled to make certain deductions, rectification costs - The Parties’ Contentions & the Court’s Findings [153] PSSB again launched a two-pronged attack against the Award on the Jurisdiction Point and Natural Justice Point by claiming that the Arbitrator had disregarded evidence, exceeded his jurisdiction and/ or dealt with matters which were never submitted to arbitration or addressed by the parties in the following instances:

In considering the issue as to whether PSSB was entitled to make certain deductions (see Chapter 25, pp 390 - 391 of the Award), namely, the costs of engaging third parties in the sum of RM2,154,057.04 and the costs of defective works amounting to RM7,346,713.39, the Arbitrator addressed his mind to PSSB’s claim for the former item in the said amount whereas the sum which was submitted in PSSB’s Submissions at paras 397 - 407 is RM1,958,233.67. I have scrutinised PSSB’s Submissions and the Award and it is instantly apparent that PSSB’s contention is completely unfounded. In para 397, PSSB submitted that the sum of RM1,958,233.67 being the expenses incurred in engaging third party contractors prior to the determination of the Contract is part of the total sum of RM2,154,057.04 claimed under item (A)(d) of Bundle R4. The sum of RM1,958,233.67 is made up of RM1,408,533.14 as cost to Eden Hybrid Sdn Bhd (‘Eden’) and RM543,700.53 to 5 Hup Construction Sdn Bhd (‘5 Hup’). The Arbitrator’s analysis as to PSSB’s claim for the sum of RM1,958,233.67 is in Chapter 31 – “Q12 Whether The Respondent Had, Before The Claimant’s Determination, But With Its Consent – Incurred RM1,958,233.67 To Engage Third Party Contractors?”. The end result of the Arbitrator’s thought process, whether under Chapter 25 or Chapter 31 is the same, namely, to reject PSSB’s claim. It is thus ludicrous for PSSB to submit as it did in the instant application.

The “consent” issue PSSB argued that there is no basis for the Arbitrator to reject PSSB’s claims for the said sum of RM1,958,233.67 because the third party contractors were engaged with the consent of Vistasik as supported by documentary evidence consisting of –

the AI No. 44 dated 18.10.2013 where Vistasik was informed that, pursuant to Clause 2.4 CoC, PSSB has employed Eden to execute the Works and any additional cost incurred shall be set off by PSSB under Clause 30.4

(ii) Vistasik’s letters dated 4.7.2013, 5.8.2013 and 26.9.2013 asking PSSB to proceed to pay the named contractor and suppliers for the total sum of RM631,251.33, RM324,538.71 and RM233,771.08 and to be deducted from Vistasik’s Progress Payment Certificate Nos. 21, 22 and 23, respectively. Further, PSSB referred to the Arbitrator’s analysis on the quantum of its claims at paras 33 - 80, pp 545 - 576 of the Award and asserted that the Arbitrator failed, refused and/ or neglected to take into account the fact that Vistasik would not have consented to the appointment of third party contractors while the Contract was still subsisting had Vistasik proceeded with the Works regularly and diligently. Vistasik itself, says PSSB, recognised that it could not carry out its obligations and agreed to the appointment of the third party contractors. Upon my review of the Award, I find that the Arbitrator had referred to AI 44 in para 6, p 537 and to PSSB’s argument that Vistasik did not object to the appointment of Eden and to the additional costs to be borne by Vistasik in para 10, p 539. In each instance, the Arbitrator immediately thereafter alluded to PSSB’s submission that it has the right to set off such additional costs under Clause 30.4 CoC. The issue as to the applicability of Clause 30.4 CoC will be dealt with in the succeeding subpara. The Arbitrator was therefore well aware of PSSB’s arguments premised on Vistasik’s consent as to the appointment of the third party contractors but he nevertheless dismissed PSSB’s claim for the sum of RM1,958,233.67. His reasoning can be found in the parts of the Award on the sum of RM1,408,533.14 incurred in engaging Eden and RM543,700.53 incurred in engaging 5 Hup (paras 5 - 66 and 67 - 81, respectively). After having concluded that PSSB did not raise the set off by way of any notice to Vistasik, this is what the Arbitrator said with regards to the sum incurred in engaging Eden: “62. What is the evidence proffered by the Respondent that the evidence that the claimant had ‘consented’ to the payment of RM1,408,533.14 – or any part thereof – to the Respondent? The Respondent says, the claimant ‘did not object to Eden Hybrid’s appointment, or any additional costs to be borne by it. ‘Consent’ it argues, ‘is implicit’. There are two problems with this view: the Respondent has to prove the liability for the work, follow through with the procedures laid out in clause 30.4, and give the requisite notice, within the stipulated time. There, it failed. Second, consent or no consent, the claim for the RM1,403,533.14 needs to be proved. The Claimant may have agreed to the idea of section 30.4. That does not detract from the Respondent’s need to satisfy the tribunal that it has crossed the evidential barrier. Has it done so? The relevant oral evidence on this subject are in the Notes of Proceedings dated 08.01.2018, dated 25.01.2018, dated 12.03.2018. I find nothing credible.” and as to the sum incurred in engaging 5 Hup, “76. The cross-examination by the Respondent’s counsel reveals that as between 5 Hup and the Respondent there had been no agreement to appoint 5 Hup. Therefore, there was no element of consent as between 5 Hup and the Respondent after the termination of the claimant. Nor was there any independent evidence that the Respondent had appointed 5 Hup. The evidence of its witness, RW-2, had been that ‘there was no appointment between 5 Hup and Propel (the Respondent).’”. Hence, this is clearly a reasoned decision by the Arbitrator. In hearing the Setting Aside Application, this Court does not sit as an appellate court. The Court is not at liberty to examine the correctness or otherwise of the arbitral tribunal’s assessment of the evidence on the issue of consent. In sum, there is no basis to set aside the Award on the Jurisdiction Point and/ or the Natural Justice Point based on this ground of challenge.

Clause 30.4 of the CoC According to PSSB, Clause 30.4 CoC is irrelevant in so far as the claim for RM1,958,233.67 is concerned but the Arbitrator dismissed the same on the ground that the requirements of Clause 30.4 CoC was not triggered. PSSB repeated its allegation that the Arbitrator was bias in favor of Vistasik as he held that the counterclaim under Clause 25.4(d) CoC is subject to the pre-conditions in Clause 30.4 when Vistasik had not raised the issue of compliance of Clause 30.4. A perusal of the pleadings filed in the arbitration reveals that Clause 30.4 CoC was not expressly mentioned by the parties. This was acknowledged by the Arbitrator in paras 13 and 14, p 540 of the Award when he noted that PSSB made no specific claim for any set off under Clause 30.4 CoC, save at para 18 of its Defence which reads “… The Respondent is entitled to set off the amounts retained by the Respondent towards account of its loss and to account of the performance bond upon the breach of the Contract by the Claimant” and para 48 which states “… the Respondent says that it is entitled to and will seek to set off against the Claimant’s claims, if any (which is denied) so much of the sums claimed by way of counterclaim herein as will be sufficient to extinguish it.”. It should be highlighted straightaway that Vistasik did refer to Clause 30.1 on “Payment application and issuance of Architect’s certificate” in para 82 of the Reply Submissions in the context of VN 27 i.e. that VN 27 was done in accordance with Clause 30.1 and reflects the work executed and materials on site. Notwithstanding the “deficiency in the pleading”, which the Arbitrator decided to ignore, he was of the view that the material issue is the procedural requirements as stipulated in Clause 30.4 since PSSB was seeking a set off (see para 18, p 541 of the Award. Clause 30.4 CoC is also discussed under PSSB’s claim for rectification costs in paras 147 - 158, pp 448 - 450 of the Award). Clause 30.4 of the CoC is re-produced below: “30.4 The Employer shall be entitled to set-off all cost incurred and loss and expense where it is expressly provided under Clause 2.4, 4.4, 5.1,

6.5(e), 6.7, 14.4, 15.3(b) 15.3(c), 15.4, 15.5, 19.5 and 20.A.3. No set-off under this clause may be made unless:

30.4(a) the Architect or Quantity Surveyor (on behalf of the Employer) has submitted to the Contractor complete details of their assessment of such set-off; and

30.4(b) the Employer or the Architect on his behalf has given the Contractor a written notice delivered by hand or by registered post, specifying his intention to set-off the amount and the grounds on which such set-off is made. Unless expressly stated elsewhere such written notice shall be given not later than twenty eight (28) Days before any set-off is deducted from any payment by the Employer. Any set-off by the Employer shall be recoverable from the Contractor as a debt or from any monies due or to become due to the Contractor under the Contract and/or from the Performance Bond. If the Contractor after receipt of the written notice from the Employer or the Architect on his behalf, disputes the amount of set-off, the Contractor shall within twenty one (21) Days of receipt of such written notice, send to the Employer delivered by hand or by registered post a statement setting out the reasons and particulars for such disagreement. If the parties are unable to agree on the amount of set-off within a further twenty one (21) Days after the receipt of the Contractor’s response, either party may refer the dispute to adjudication under Clause 34.1. The Employer shall not be entitled to exercise any set-off unless the amount has been agreed by the Contractor or the adjudicator has issued his decision.”. The arbitral tribunal firstly noted that PSSB did not indicate under which Clause of the CoC that it was invoking its right to set off since the chapeau to Clause 30.4 CoC expressly states the provisions which gives that right to the Employer. Secondly, the Arbitrator remarked on the requirements as to notice as provided under Clause 30.4(a) and (b) CoC and that there is a time limit on the giving of such notice. The Arbitrator then considered the evidence and found that –

there is no evidence that any notice had been sent to

(ii) none of the grounds for the set off had been explained to Vistasik; and

(iii) the purported notice being the QS’s letter dated 7.10.2016 was addressed to PSSB, and not Vistasik, and it was sent three years after the determination of the Contract. It is my considered view that since PSSB did submit its entitlement to set off the sums claimed by way of the counterclaim against Vistasik’s claims; AI 44 was among the documentary evidence submitted in the course of the arbitration and Clause 30.4 CoC is mentioned therein; and submissions were made on Clauses 25.4(d) and 30.1 CoC, the Arbitrator was perfectly entitled to take cognizance of the entire Clause 30 of the CoC and to interpret the interplay between the contractual provisions in relation to PSSB’s claim for the sum of RM1,958,233.67. I agree with Vistasik’s counsel that the reading of Clause 25.4 together with Clause 30.4 is completely within the jurisdiction of the Arbitrator as these provisions are part of the LoA to which the parties are signatories and is one of the fundamental documents forming the basis of both Vistasik’s claims and PSSB’s counterclaim. As for PSSB’s contentions based on the Natural Justice Point, I do not think that PSSB has fulfilled the test in Jan De Nul and assuming that I am wrong in holding this view and the parties ought to have been given further notice and the opportunity to respond on the interpretation of Clause 30.4 CoC, the question of the seriousness of the breach i.e. whether the breach was material to the outcome of the arbitral proceeding arises for determination (see Master Mulia). In dealing with the issue of quanta, the Arbitrator had undertaken a detailed examination of the evidence given by RW2, RW3 and RW6 on the claim for the sum incurred in engaging Eden and he highlighted many problems with these (see paras 42- 57, pp 547 - 561 of the Award) whilst for the sum incurred in engaging 5 Hup, the Arbitrator concluded, from the cross-examination of RW1, that there had been no agreement between PSSN and 5 Hup to appoint 5 Hup. In addition, the Arbitrator said that there was no evidence to show that 5 Hup had rendered services in the amount as claimed by PSSB (see paras 67 - 81, pp 569 - 576 of the Award). As a result, the Arbitrator determined that PSSB did not prove the quantum of its counterclaims. This means that any breach of the rules of natural justice during the arbitral proceedings or in connection with the making of the Award by failing to give PSSB the chance to make submissions on Clause 30.4 CoC is not material to, or is not likely to have affected, the outcome of the arbitral proceeding as PSSB had failed to establish the element of quantum anyway.

Rectification costs PSSB pointed out to para 55, p 386 of the Award where the Arbitrator held that PSSB had failed to prove that it suffered any loss to which PSSB had used the monies from the PB. PSSB’s unhappiness relates to the Arbitrator decision to ignore the evidence contained in the Final Account on the rectification costs of RM7,346,713.39. However, as will be shown below in the 11th Ground, this is because the Arbitrator had rejected the documents produced by PSSB which were purportedly the Final Account. 11th Ground: Jurisdiction Point [subparas 37(1)(a)(iv) and 37(1)(a)(v) AA 2005] and Natural Justice Point [subparas 37(1)(a)(iii), 37(1)(a)(vi) and 37(1)(b)(ii) AA 2005] – Final Account - The Parties’ Contentions [154] PSSB gave a long list of reasons as to why it contends that the Award should be set aside on the Jurisdiction Point as well as the Natural Justice Point. [155] The main arguments relating to the Jurisdiction Point are that the Award has dealt with a dispute not contemplated by or not falling within the terms of the submissions to the arbitration and beyond the scope of the submission to arbitration, and/ or contains a decision on the matters beyond the scope of the submission to arbitration as –

the issue of the Final Account was not an agreed issue to be tried and there was no agreement to arbitrate in respect of the Final

the Arbitrator went beyond his jurisdiction in rejecting the Final

the Arbitrator rejected the Final Account but failed to make any determination on the evidential value of the Draft Final Account despite extensive submissions by PSSB; and

the Arbitrator had acted beyond his jurisdiction in concluding at paras 85 and 86, p 429 of the Award that the conclusiveness evidence clause in the PAM Agreement, unlike in the banking industry, are “temporally dependent on certain events having to occur in a certain order within a certain period of time. These considerations are completely removed in reality and law from the considerations that apply to the interpretation of banking certificates of indebtedness.”. [156] The key contentions as to the Natural Justice Point are set out below:

PSSB’s submission before the arbitral tribunal was that the Final Account should be deemed to be conclusive pursuant to Clause 25.6 of the CoC. The Arbitrator has no basis, legally or factually, to distinguish the established legal principles of the conclusiveness evidence clause. The Award is against public policy in so far as displacing the conclusiveness evidence clause in a PAM contract.

The Arbitrator was bias in favor of Vistasik as –

he distinguished every authority submitted by PSSB despite there being no serious attempt by Vistasik to rebut and reply on the legal issues surrounding the Final Account i.e. the conclusiveness of the same. The Arbitrator had displaced the established legal principles thereto without any basis and embarked on his own volition to argue the case for Vistasik without affording PSSB the right to submit or clarify accordingly;

(ii) he dismissed the evidence by the QS on the Final Account by reason of alleged manifest error despite there being no credible evidence to the contrary proffered by Vistasik. The Arbitrator erroneously placed the legal burden on PSSB to prove that there was no manifest error in the Final Account;

(iii) he held that the counterclaim under Clause 25.4(d) CoC is subject to the preconditions contained in Clause 30.4 when Vistasik had not raised the issue of compliance of Clause 30.4. This issue has been discussed under the 10th Ground above;

(iv) he distinguished the uncomplicated legal principles as laid down in Bank Bumiputra Malaysia Bhd Kuala Terengganu v Mae Perkayuan Sdn Bhd & Ors [1993] 2 MLJ 76 on a non-consequential factor and introduced the requirement of pre-contract knowledge to be proved for a successful claim in damages i.e. whether “the Defendant know at the time it entered into the contract, that if delayed, it will have to pay this amount claimed”; and

he arbitrarily, applied the authority of Kokomewah Sdn Bhd v Desa Hatchery Sdn Bhd [1995] 1 MLJ 214 against PSSB when he held that PSSB must prove the losses as a result of Vistasik’s breach. The Arbitrator, without just cause and valid reasons, refused to apply the Federal Court’s decision in Cubic Electronics (supra) which elucidated the applicable legal principles on liquidated agreed damages. [157] Apart from the above, PSSB also submitted that the Award totally disregarded the evidence presented and went against fundamental principles of law amounting to patent and substantial injustice, serious irregularity and other similar serious flaws and is manifestly unlawful and unconscionable justifying the setting aside of the Award as the Arbitrator had misconstrued several clauses in the PAM Agreement, namely, Clause 25.1 on the Defaults by Contractor, Clause 30.1 on Payment application and Issuance of Architect’s certificate, Clause

30.4 on Set-off by Employer, Clause 34.5 on Disputes referred to arbitration and Clause 37.4 on failure to extend the validity of the PB. [158] In contrast, Vistasik took the position that –

the issue of the Final Account falls under the heading A-4, Q-1 of the ITBT and it was also raised throughout the arbitral proceedings as it was the heart of PSSB’s counterclaim;

consideration of the Final Account is paramount in the determination as to whether the termination of Vistasik’s employment was valid;

in order for the Final Account to be deemed as conclusive pursuant to Clause 25.6 CoC, the question as to whether Bundle H (which PSSB claims is the Draft Final Account while Vistasik says is the Final Account) or Bundle R4 (which PSSB contends is the Final Account whilst Vistasik says it did not receive) is the Final Account, must be determined first. The Arbitrator had studied these Bundles and considered the fact that Bundle R4 was received by Vistasik after the commencement of the arbitration and more than six months after the determination of Vistasik’s employment and therefore the conclusive evidence clause did not apply;

the Arbitrator had taken cognisance of all arguments forwarded by PSSB and had carefully considered the case authorities relied upon by PSSB before arriving at a decision on these; and

PSSB is misusing the powers of the Court in the attempt to dwell into the merits of the case. - The Findings of the Court [159] Starting first with the points of argument in respect of the Jurisdiction Point, no express reference is made to the “Final Account” in the ITBT. Vistasik contends that the issue of Final Account is implicit under heading A-4 on the “Claimant’s Case – Quantum” and Q-1 thereunder which reads “Parties are to finalise and agree on the quantum by each party in the event liability is established for either party”. [160] Furthermore, PSSB alleged that Vistasik did not complete the Works and PSSB had to appoint Esamegah to complete the Contract. The composition of the total loss incurred claimed by PSSB against Vistasik includes the amount incurred to complete the balance of the Works. This necessitates an inquiry into the value of Works which were completed by Vistasik up to the date of determination of the Contract. [161] The Arbitrator began his analysis on the issue of whether the counterclaim can succeed and if so, as to what head of damages, by stating that the heart of the counterclaim rests upon PSSB’s proposition that the accounts it had produced before the arbitral tribunal through RW2 and RW6 is the Final Account (see para 1, p 404 of the Award). [162] PSSB’s contention in this Court that the Final Account is not an issue to be tried files in the face of the stand that it took at the arbitration that a deliberation on the Final Account is essential in the determination as to whether its counterclaim will succeed or fail. PSSB argued that the Final Account was prepared and issued pursuant to the conclusive evidence clause in Clause 25.6(a) and (b) of the CoC (see, inter alia, paras 306 - 314 of PSSB’s Submissions at the arbitration on “Draft Final Account and the Final Account”, paras 315 - 325 on “Conclusiveness of the Final Account”, paras 326 - 333 as to whether there is a manifest error in the Final Account and paras 366 - 373 on the “Head of Counterclaim”). In fact, reference was made to the Final Account in most of PSSB’s submissions on the issue of whether it has incurred and proven each of the item claimed in the Counterclaim. Arguments pertaining to the Final Account was similarly made in PSSB’s Reply Submissions. [163] It is therefore my considered view that PSSB’s submission that the Final Account was not an agreed issue to be tried and there was no agreement to arbitrate in respect of the Final Account is utterly baseless. The issues surrounding the Final Account is implied under the headings of A-4, Q-1 and QB-1 (“Questions on the Counterclaim”) in the ITBT. Had the Arbitrator not considered the Final Account in the Award, PSSB would then accuse the Arbitrator of failing to decide on matters which were clearly submitted by the parties in the arbitration. [164] It follows from the above reasoning that PSSB’s claim that the Arbitrator went beyond his jurisdiction in rejecting the Final Account is equally unjustified since the issue as to whether Bundle H or Bundle R4 is the Final Account was undoubtedly an issue which was submitted to the Arbitrator for his decision and he surely had to elect one or the other. This is how the Arbitrator explained the “real issue”: “53. The real question is whether the document in R4 is in fact the “Final Account”. The notice to arbitrate was issued and delivered to the Respondent on 3 August 2016.

By this time clause 34.5 of the Contract had been activated. That clause reads as follows:

34.5 “in the event that any dispute or difference arises between the Employer and Contractor, either during or the progress or after the completion or abandonment of the Works regarding: (a) any matter of whatsoever nature arising under or in connection with the Contract;” or “(d) “the rights and liabilities of the parties under Clause 25.0, 26.0, 31.0 or 32.0 … then such disputes or differences shall be referred to arbitration”.

All those maters failing under the rubric of “Final Account upon determination” fall under clause 25.6. And, therefore, any dispute as to the correctness or otherwise of any Final Account – even one to be prepared in the future namely 17 July 2017 in Bundle R4 - seem to me to be caught by clause 34.5. …

I note that the Certificate of Practical Completion for the Hotel was on 15 September 2015. The Certificate of Practical Completion for Block B – 21 story Hotel Suites was on 15 May 2015. Assuming the latest date of practical completion fell on 15 September, under clause 25.6, the Respondent had six months to hand over the Final Account to the Claimant. That would have fallen on 14 March 2016. The “draft” Final Account was taken by CW-1 on 20 March 2017. The document in R4 was sent to the Claimant on 17 July 2017. By 17 July 2017 the Respondent was already 16 months late in preparing its alleged “Final Accounts”.]”. [165] Moving next to PSSB’s submission on the conclusive evidence clause, the contractual provision which was invoked is Clause 25.6 of the CoC and it reads: “25.6 The Architect or Quantity Surveyor shall within six (6) Months on completion of the Works, submit to the Employer and Contractor for their agreement, a final account for all cost incurred to complete the Works including the sums previously certified to the Contractor before the date of determination, Liquidated Damages, set-off and all other loss and/or expense suffered.

25.6(a) If nothing in the said final account is disputed by the Employer or Contractor within three (3) Months from the date of receipt of the final account from the Architect or Quantity Surveyor, the final account shall be conclusive and deemed agreed by the parties. If the amount in the final account exceeds the total amount which would have been payable on completion in accordance with the Contract, the difference shall be a debt payable to the Employer by the Contractor or where applicable, the Employer may recover such sum from the Performance Bond. If the said amount is less than the said total amount, the difference shall be a debt payable to the Contractor by the Employer.

25.6(b) If either party has any dispute on the final account, the party disputing the final account shall by written notice to the other party (with copies to the Architect and Quantity Surveyor) set out any disagreement complete with particulars within three (3) Months of the date of receipt of the final account from the Architect or Quantity Surveyor. The Architect or Quantity Surveyor within three (3) Months from the date of receipt of the grounds of dispute shall either amend or not amend the final account. Any party disagreeing with the amended final account or decision not to amend the final account shall refer the dispute to arbitration under Clause 34.0 within three (3) Months from the date of receipt of the amended final account or decision not to amend the final account. Failure to refer the dispute to arbitration within the stipulated time, the final account or amended final account shall deem to be conclusive and agreed by the parties.

25.6(c) Any dispute on Liquidated Damages, set-off and interest which the Employer is entitled to make under the Contract shall be referred to arbitration.”. [166] PSSB alleged that the Arbitrator had acted beyond his jurisdiction in making the conclusions at paras 85 and 86, p 429 of the Award. In order to determine the legitimacy of this assertion, PSSB’s real proposition before the arbitral tribunal has to be appreciated. Basically, PSSB said that since Clause 25.6(a) and (b) CoC is a conclusive evidence clause and save for fraud or manifest error on the face of the Final Account, the sum of RM66,146,806.57 as shown in the Final Account must be accepted as conclusive evidence that Vistasik owes that sum of money to PSSB. [167] In support of this submission, PSSB had cited the cases of Citibank NA v Ooi Boon Leong & Ors [1980] 1 LNS 168, Cempaka Finance Bhd v. Ho Lai Ying & Anor [2006] 3 CLJ 544, CIMB Bank Berhad v. ZIMA Properties Sdn Bhd & Ors [2014] 6 CLJ 677 and Taiwan Chief Precision Technology Sdn Bhd (formerly known as Li Yo Electronics Sdn Bhd) v Tenaga Nasional Bhd [2013] 4 MLJ 625. These decisions were duly considered by the Arbitrator who observed that all these cases “… were banking cases premised on a guarantee that house a clause that pointed to the unquestionable liability of a customer that arose from a Certificate of Indebtedness. None of these cases are based on a building contract. In none of these cases were the effect of the conclusive nature of the Final Account premised on a clause in a PAM Contract. For the purposes of their application in the contractual interpretation of this case, with the greatest deference to the erudition exhibited by the Respondent’s counsel, I am unable to agree that these cases are of any assistance to the instant case.”. [168] The Arbitrator acknowledged that “a case could be made that “conclusive evidence clauses” across all manner of Contracts, no matter what the subject matter of the Contract is, ought to be construed uniformly”, however he finally decided that: “85. I am unable, by reason of the circumstances of this case, the building Contract industry, and the manner in which the nature of the business in the building Contract industry differs from the nature of the business in the banking industry, to equate a banker’s Certificate of Indebtedness with the Conclusive Evidence Clause in a Building Contract. A certificate of indebtedness in the banking case has the effect of reversing the burden of proof normally reposed in a bank on the unwilling hands of a debtor. The reason the courts have always upheld any bank’s certificate of indebtedness is that a debtor ties himself down to an admission of the correctness of the certificate of indebtedness.

On the other hand the way building Contract “conclusive evidence clauses” are couched make them temporally dependent on certain events having to occur in a certain order within a certain period of time. These considerations are completely removed in reality and law from those considerations that apply to the interpretation of banking certificate of indebtedness.

So the Citibank test of looking for a manifest error in order to defeat a certificate of indebtedness do not apply in building Contract cases which are dependent on “conclusive evidence clauses”.”. [169] Based on the above analysis, PSSB’s argument that the Arbitrator had acted beyond his jurisdiction is fallacious since the case authorities were submitted by PPSB itself and having done that, the Arbitrator was entitled to accept PSSB’s argument on the applicability of these cases to the facts in the case before the arbitral tribunal or to distinguish them. The Arbitrator chose the latter and it is not for this Court to pass a verdict as to whether he had erred in this respect or otherwise. It is for the same reason that this Court must reject PSSB’s argument under the Natural Justice Point that the Award is against public policy because it displaced the conclusive evidence clause in the CoC and that the Arbitrator was bias towards Vistasik. [170] Even though Vistasik did not forward its position on the four case authorities in its Reply Submissions, this does not mean that the Arbitrator should have accepted PSSB’s propositions based on these case law in toto. The Arbitrator would be failing in his duties if he did not critically analyse the cases and provide his views on the applicability of the legal principles therein to the matter in dispute. Further, the scenario here is not one which demands for further submission or clarification from PSSB who had been afforded full opportunity to present its case to the arbitral tribunal. [171] Proceeding next to PSSB’s criticisms of the Arbitrator’s analysis of the decisions in Mae Perkayuan and Kokomewah, these cases actually arose for consideration in Chapter 30 of the Award relating to Question 11 “Whether Respondent Had Incurred And Proven Additional Fees Of RM1,706,810.87 Under Paragraph 60 Of Counterclaim”. In para 60 of the Counterclaim, PSSB alleged that it had incurred additional professional fees and costs to complete the balance of the works consisting of Project Consultant Cost to Architect KHP and three other companies. [172] PSSB argued that in Mae Perkayuan, the Supreme Court had accepted the QS’s estimates on the loss of profits and by analogy, the Final Account in the case before the arbitral tribunal should be accepted as evidence of the completion costs incurred because the Final Account is based on the records, books, documents and accounts. In addition, PSSB submitted that, from the cases where the courts have awarded damages for costs incurred to complete the project, the courts accept completion costs as naturally arising from a breach of the contract by the offending party (see paras 21 - 23, p 505 of the Award). [173] The Arbitrator undertook an extensive analysis of Mae Perkayuan (from paras 24 to 35, pp 505 - 512 of the Award) before he chose to distinguish the facts in Mae Perkayuan and in the instant arbitration for the following reasons:

Mae Perkayuan was about loss of profits which the court can only estimate whereas PSSB’s case concerns actual loss suffered by PSSB which must be proved by direct evidence;

Mae Perkayuan dealt with the facts on the basis that the appellant bank had foreknowledge of what damages Mae Perkayuan would suffer from the start. In the arbitration case, no evidence was led by PSSB that Vistasik knew, at the time that it entered into the Contract, that if the Project was delayed, it would have to pay the amount as claimed; and

there was no oral and documentary evidence as to what works were done for this claim. [174] The Arbitrator then concluded that he was unable to accept Mae Perkayuan’s case as authority for the proposition as advanced by PSSB that any QS’s estimate must be accepted by the tribunal. [175] The Arbitrator embarked on a similarly extensive analysis of Kokomewah’s case at paras 43 to 55, pp 514 - 522 of the Award and came to the same conclusion that he cannot accept PSSB’s argument that the QS’s evidence should be accepted as being correct on the basis of the ratio in Kokomewah because Kokomewah was decided on some other ground which was not even the issue in contention in the arbitration and that there is no principle in Kokomewah which is consistent with the argument put forth by PSSB. [176] PSSB also took issue with the Arbitrator’s refusal to apply the decision in Cubic Electronics’s case which arose in Chapter 33 of the Award relating to Question 14 “Whether Under Cl. 22 Of Contract & Sec. Contracts Act 1950, The Respondent Is Entitled To Liquidated Ascertained Damages (‘LAD’) Of RM7,950,000.00”. In the discussion at paras 6 to 26 at pp 587 - 596 of the Award, it is observed that the parties had cited several cases to support their respective arguments and the Arbitrator had analysed the cases by setting out the pre and post Cubic Electronics position of the law (paras 126 to 177 at pp 619 - 636 of the Award). [177] The eight-component test as laid down by the Federal Court in Cubic Electronics was set out in para 177 of the Award followed by the application of these components to the facts in the arbitration case. The Arbitrator found, among others, that although PSSB can, under the principles in Cubic Electronics, make the LAD claim without proof of actual damage, but PSSB has failed in the “initial onus” test of having to prove that it was Vistasik that has breached the Contract. [178] After having read the relevant parts of the Award concerning the present complaints by PSSB before this Court, I have no hesitation whatsoever in finding that PSSB’s allegation that the arbitral tribunal was other than impartial is without merit. This is because, PSSB is essentially unhappy with the Arbitrator’s assessment of the evidence and his findings of facts and/ or of law. This unhappiness was transformed into an accusation that the Arbitrator did not make an objective determination of the issues that he has to resolve. [179] With regards to the contention that the Award went against fundamental principles of law amounting to patent and substantial injustice etc. in that the Arbitrator had misconstrued Clauses 25.1,

30.1, 30.4, 34.5 and 37.4 of the CoC, it is trite that the interpretation of clauses in a contract is a question of law and even if the Arbitrator had erred in this respect, this does not prove biasness on his part against PSSB. [180] Moreover, as reasoned in para 83 above, PSSB did not make any attempt to prove that it has fulfilled the legal requirements for a case of bias to be made out. [181] In the final analysis, this is yet another instance of a disgruntled respondent whose arguments were rejected by the arbitral tribunal. In the premises, I find and hold that there is no valid reason for this Court to set aside the Award on the Jurisdiction Point and/ or the Natural Justice Point. Sub-s 37(3) AA 2005: Whether that part of the Award pertaining to the 4th Ground (Ground No. 5 in the Award/ Said Issue) can be severed and be set aside [182] Following from the finding of this Court that PSSB has proven the 4th Ground in the Setting Aside Application pursuant to subpara 37(1)(a)(v) AA 2005 on a balance of probabilities, the provision of sub-s 37(3) then falls to be considered since subpara 37(1)(a)(v) is expressed to be subject to sub-s 37(3). As observed by the apex court in Master Mulia (supra), “… only sub-s 37(1)(a)(v) is made subject to sub-s. 37(3) which allows for severance of part of an award. As such, precedents from other jurisdictions cannot override the clear language and words of s. 37 of the AA 2005.”. [183] In Garden Bay Sdn Bhd v Sime Darby Property Bhd [2018] 2 MLJ 636, the Court of Appeal elucidated that, apart from sub-s 37(6), sub-s 37(3) is among the few provisions in the AA 2005 which gives the court some options to consider to save the award from being set aside. Severability will be applicable to a complaint under subpara 37(1)(a)(v) where the attack is only against part of the award. The Court also said: “[13] In addition, Malaysia has included a sub-provision for the court to separate part of the award, thereby accepting the doctrine of separability and/or severability to set aside a part of the award only and is reflected in s 37(3). The doctrine of severability was already in place by development of case laws under the old regime. If the award can be severed to save the integrity of the decision making process, the courts have readily done so. However, if the award is inextricably interwoven with the jurisdictional issue and cannot be severed without violence to the jurisdictional principles and/or quantum, the courts have refused to exercise its discretion. …”. [184] In the present case, I am of the view that the Arbitrator’s decision on matters that were submitted to arbitration can be separated from the decision which relates to the 4th Ground (Ground No. 5 in the Award/ Said Issue). Therefore, pursuant to sub-s 37(3) AA 2005, the Court ordered that only that part of the Award on Ground No. 5 in the Award: Whether there was delay by PSSB in the certification of payments and in making payment is to be set aside. [185] Since Vistasik had succeeded in its claim based on the other grounds at arbitration and this Court has found that, save for the Said Issue, the Setting Aside Application is unmeritorious, the overall result is that Vistasik still has an award which is capable of being the subject of an application under s 38 AA 2005. II. O.S. No. WA-24C(ARB)-44-10/2019: The Enforcement Application [186] The Enforcement Application was filed by Vistasik pursuant to s 38 of the AA 2005 which provides, inter alia, as follows: “Recognition and enforcement

(1) On an application in writing to the High Court, an award made in respect of an arbitration where the seat of arbitration is in Malaysia or an award from a foreign State shall, subject to this section and section 39 be recognized as binding and be enforced by entry as a judgment in terms of the award or by action.

In an application under subsection (1) the applicant shall produce –

the duly authenticated original award or a duly certified copy of the award; and

the original arbitration agreement or a duly certified copy of the agreement. …”. [187] Since the formal requirements under sub-s 38(2) AA 2005 have been met (the duly certified copy of the arbitration agreement and the Award were exhibited as exhibits “CWK-1” and “CWK-3” in the AIS) and the Award is capable of being separated, the Enforcement Application was allowed except for the part of the Award on the Said Issue. As indicated at the start of this judgment, the said Issue is one out of 13 grounds raised by Vistasik to challenge the determination of its employment by PSSB. Therefore, the findings and conclusions of the Arbitrator on the other aspects as to liability and quantum relating to Vistasik’s claims and PSSB’s counterclaim are unaffected. [188] In closing, it should be mentioned that the Court had highlighted to Vistasik’s counsel that prayer 2(i), (ii) and (iii) in the O.S. do not precisely reflect the operative part of the Award (see paras 1.0, 3.0,

4.0 and 5.0 in Chapter 38, pp 770 – 772 of the Award). The Court understands that the sum of RM20,196,004.59 in prayer 2(i) was obtained by adding the amounts allowed in subparas 1.1 – 1.4 in Chapter 38 of the Award. However, as for interest, subparas 1.3 and 1.4 in Chapter 38 states that interest is to calculated from 5.12.2013 and 12.12.2013, respectively, and not 15.12.2013 as appears in prayer 2(ii). [189] The Court was of the opinion that judgment in favour of Vistasik should be entered according to the terms in the operative part of the Award and this was agreed to by the counsels representing both parties. Conclusion [190] On the issue of costs, Mr. T. Kuhendran started with the basic premise that costs would normally follow the event. In view of the fact that the Setting Aside Application was dismissed save for one ground of challenge and that the Enforcement Application was allowed except for the same one ground, the learned counsel posited that costs in the sum of RM15,000.00 for each application would be appropriate. [191] Mr. J. Chandra stressed that the Award was attacked on 11 grounds but finally, PSSB was successful on only one ground. There were numerous submissions and clarifications on difficult areas of the law and so the learned counsel prayed for costs of RM150,000.00 for the Setting Aside Application and RM50,000.00 for the Enforcement Application. [192] Ultimately, I agreed with Mr. T. Kuhendran that the quantum of costs as sought by Vistasik is on the high side for a hearing on affidavits, even considering that this is one of the more complex applications to be heard in this Court. Costs was thus awarded in the sum as prayed by PSSB, subject to allocatur. Dated: 20 April 2022 (ALIZA SULAIMAN) Judge Construction Court 2 High Court Kuala Lumpur Counsels/ Solicitors: For the Plaintiff in O.S. No. WA-24C(ARB)-39-09/2019 and the Defendant in O.S. No. WA-24C(ARB)-44-10/2019: T. Kuhendran (Joseph Yeo, Daniel Lau and Kelvin Ng Sin Huat with him) Messrs. Joseph Yeo Advocates & Solicitors 7th Floor, Wisma Tan Kim San No. 518A, 3rd Mile, Jalan Ipoh 51200 Kuala Lumpur For the Plaintiff in O.S. No. WA-24C(ARB)-44-10/2019 and the Defendant in O.S. No. WA-24C(ARB)-39-09/2019: Jadadish Chandra (Jagshey Pipariya and Jasmina Asman with him) Messrs. Arbain & Co. Advocates & Solicitors Suite C-5-1, Plaza Mont Kiara No. 2 Jalan Kiara Mont Kiara 50480 Kuala Lumpur Cases, legislation and other sources referred to in the submissions by learned counsels and in the Grounds of Judgment: Cases: Aston Villa Sdn Bhd v. Infra Segi Sdn Bhd [2018] 5 MLRH 417 Bank Bumiputra Malaysia Bhd Kuala Terengganu v Mae Perkayuan Sdn Bhd & Ors [1993] 2 MLJ 76 Bonston Deep Sea Fishing and Ice Company v. Ansell [1881] 39 Ch D 339 Cempaka Finance Bhd v. Ho Lai Ying & Anor [2006] 3 CLJ 544 CIMB Bank Berhad v. Zima Properties Sdn Bhd & Ors [2014] 6 CLJ 677 Citibank NA v Ooi Boon Leong & Ors [1981] 1 MLJ 282; [1980] 1 LNS 168 CTI Group Inc v International Bulk Carriers SPA [2017] 5 MLJ 314; [2017] 9 CLJ 499 CRW Joint Operation v PT Perusahaan Gas Negara (Persero) TBK [2011] 4 SLR 305 Cubic Electronics Sdn Bhd v Mars Telecommunications Sdn Bhd [2018] MLRAU 1 Daya CMT Sdn Bhd v. Yuk Tung Construction Sdn Bhd [2016] 1 LNS 649 Dr Shanmuganathan v Periasamy S/O Sithambaram Pillai [1997] 3 MLJ 61 England and Wales Court of Appeal (Civil Division) Decisions in Minister of Finance (Incorporate) 1Malaysia Development Berhad v International Petroleum Investment Company Aabar Investment PJS [2019] EWCA Civ 2080 Garden Bay Sdn Bhd v Sime Darby Property Bhd [2018] 2 MLJ 636 Hadley v Baxendale [1854] 9 Ex 341 J.M. Hill & Sons Ltd v London Borough of Camden [1982] 18 BLR 31 Jan De Nul (M) Sdn Bhd & Anor v Vincent Tan Chee Yioun & Anor [2019] 2 MLJ 413 Johawaki Development Sdn Bhd v. Majlis Agama Islam Wilayah Persekutuan & Another Case [2020] MLRHU 483 Johor Coastal Development Sdn Bhd v Constrajaya Sdn Bhd [2009] 4 MLJ 445 Joo Seng Trading Co v Commercial Importers and Distributors Sdn Bhd [2007] 4 MLJ 128 JVL Agro Industries Ltd v Agritrade International Pte Ltd [2016] 4 SLR 768 KEP Mohamed Ali v KEP Mohamed Ismail [1981] 2 MLJ 10 Kerajaan Malaysia v Perwira Bintang Holdings Sdn Bhd [2015] 6 MLJ 126; [2015] 1 CLJ 617 Kerajaan Malaysia v. Ven-Coal Resources Sdn Bhd [2013] MLRHU 1081 Kokomewah Sdn Bhd v Desa Hatchery Sdn Bhd [1995] 1 MLJ 214 Kyburn Investments Ltd v Beca Corporate Holdings Ltd [2015] 3 NZLR 644 Magna Prima Construction Sdn Bhd v Bina BMK Sdn Bhd and another case [2015] 11 MLJ 841 Malayan Cement Industries Sdn Bhd v. Golden Island Shipping (L) Bhd [2017] 4 MLRA 526 Maredelanto Cia Naviera SA v Bergbau-Handel GmbH, The Mihalis Angelos [1971] 1 QB 164 Master Mulia Sdn Bhd v. Sigur Ros Sdn Bhd [2020] 6 MLRA 51 Maula Bux v Union India [1969] 2 SCC 554 Petronas Penapisan (Melaka) Sdn Bhd v Ahmani Sdn Bhd [2016] 2 MLJ 697; [2016] 3 CLJ 403 PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA [2006] SGCA 41 PT Prima International Development v Kempinski Hotels SA and other appeals [2012] 4 SLR 98 Sakinas Sdn Bhd v Siew Yik Hau & Anor [2002] 5 MLJ 497 Selva Kumar A/L Murugayah –v-Thiagarajah A/L Retnasamy [1995] 1 MLJ 817 Sharikat Pemborong Pertanian & Perumahan v Federal Land Development Authority [1971] 2 MLJ 210 Sigur Ros Sdn Bhd v Master Mulia Sdn Bhd [2018] 3 MLJ 608 SJIC Bina Sdn Bhd v Iskandar Regional Development Authority and another case [2020] MLJU 2366 Sunshine Fleet Sdn Bhd v Jabatan Kerja Raya Malaysia & Anor [2017] 9 CLJ 114 Taiwan Chief Precision Technology Sdn Bhd (formerly known as Li Yo Electronics Sdn Bhd) –v-Tenaga Nasional Berhad [2013] 4 MlJ 625 Tan Sri Khoo Teck Puat & Anor v. Plenitude Holdings Sdn Bhd [1995] 1 CLJ 15 Tate & Lyle Food and Distribution Ltd v Greater London Council and another [1981] 3 All ER 716 Taylor v Oakes Roncoroni [1922] 3 TLR 343 The Government of India v Cairn Energy India Pty Ltd & Ors [2014] 9 MLJ 149 The Topps Co Inc –v-Mally Jaya Sdn Bhd [1998] 5 MLJ 744 Tindok Besar Estate Sdn Bhd v Tinja Co [1979] 2 MLJ 229 Trident Engineering (M) Sdn Bhd v Ssangyong Engineering and Construction Co Ltd [2016] 6 MLJ 166 Wearne Brothers (M) Ltd v Jackson [1966] 2 MLJ 155 West Faulkner Associates v The London Borough of Newham LBG (1995) 11 Const LJ 157 Legislation: Arbitration Act 2005, ss 8, 11, 20, 21, 36, 37, 38, 39 & 42 Contracts Act 1950, ss 74, 75 Rules of Court 2012, O. 7, O. 28, O. 69 & O. Other sources: Chow Kok Fong, Law and Practice of Construction Contracts (Fourth Edition), Volume 1, Sweet & Maxwell Asia/Thomson Reuters, 2012 Datuk Professor Sundra Rajoo & Special Contributor Dr. Thomas R. Klötzel, UNCITRAL Model Law & Arbitration Rules: The Arbitration Act 2005 (Amended 2011 & 2018) and the AIAC Arbitration Rules 2018, Sweet & Maxwell, 2019