PWC Bina Sdn Bhd v 1. Kerajaan Malaysia; 2. United Overseas Bank (Malaysia) Sdn Bhd (WA-24C-38-06/2016)

1.

UNITED OVERSEAS BANK (MALAYSIA) SDN BHD ....DEFENDANT THE JUDGMENT OF YA LEE SWEE SENG [1] The Plaintiff here finds itself in an unenviable situation. It is the subcontractor of one SD Com Sdn Bhd ("SD Com"). SD Com had on 1 April 2013 been awarded a contract by the 1st Defendant ("D1"), the Government of Malaysia, through Jabatan Kerja Raya Malaysia ("JKR") for 3 the project to construct ILAJ Home in Mukim Bandar, Kuala Lumpur ("the Project"). [2] SD Com, in turn, had appointed the Plaintiff as its subcontractor for the entire Project by an agreement dated 14 May 2013. The entire work for the construction of the Project was to be done by the Plaintiff. D1 however had, pursuant to its contract with SD Com, made an advance payment of RM2,270,237.43 to SD Com. In return SD Com was required to furnish a Bank Guarantee ("BG") to secure the repayment of this sum. [3] The BG was taken from the 2nd Defendant ("D2") United Overseas Bank (Malaysia) Bhd ("UOB Bank") by the Plaintiff on behalf of SD Com. The BG no. 248FG092160 ("BG") was issued on 21 June 2013 and expired on 8 October 2014. It was extended on 20 March 2014 and was to expire on 31 January 2015. [4] On 23 January 2015 D1 had issued a Notice to unilaterally terminate the Project based on reasons that could not be avoided. Subsequent to the unilateral termination of SD Com as the main contractor, D1 made a call on the BG on 26 January 2015; five (5) days before the expiry of the BG. 4 [5] The Plaintiff rushed to Court with an urgent application (Enclosure 3A) filed under OS 24NCvC-163-01/2915 ("1st OS"), seeking inter alia an injunction to restrain D1 from calling on the BG pending the disposal of the OS (Enclosure 1). The matter was heard ex-parte and the injunction prayed for was granted on 30 January 2015. [6] At the inter-parte hearing, the ex-parte injunction granted was affirmed as there are clear serious questions to be tried and that D1's conduct was unconscionable in the circumstances of the case. Against that decision made on 23 March 2015, D1 who is the Government of Malaysia, had appealed to the Court of Appeal. The Court of Appeal dismissed the appeal on 4 February 2016. [7] At the hearing of the OS proper, the High Court held that the call on the BG by D1 on 26 January 2015 was unconscionable and granted a declaration to that effect. Against that declarative order D1 had appealed to the Court of Appeal and the appeal has not been disposed of yet. Problem [8] Whilst the appeal in the 1st OS is still pending in the Court of Appeal and despite the declaratory order by the High Court given by Justice Hue 5 Siew Kheng, D1 made another call on the BG on 26 May 2016; more than a year after the expiry of the BG on 31 January 2015. [9] The Plaintiff, baffled and bewildered by what it considered as a brash act of D1, met up with the representatives of D2 to discuss the matter. D2 informed the Plaintiff that they will be releasing the payment in the BG to D1 unless restrained by a Court order. Prayers [10] The Plaintiff once again, rushed to Court, with the present Originating Summons seeking inter alia: a) An interim injunction against D1 from calling on the BG until the disposal of all claims, appeal between the Plaintiff, the Government and SD Com; b) An interim injunction against D2 from paying under the BG till the disposal of all claims, appeal between the Plaintiff, the Government and SD Com; c) A declaration that D1's action in calling for the BG on 26 May 2016 is unconscionable; 6 d) A declaration that the BG had expired and the sum paid for the BG to be reverted to the Plaintiff; and e) An order that the Defendant returned the Plaintiff the original copy of the BG. [11] On 7 June 2016 when the Plaintiff's counsel, Mr C K Foong, implored upon this Court to hear the Application on an urgent ex-parte basis, this Court had granted an ad-interim injunction with respect to prayers (a) and

above, having been satisfied that the matter was of sufficient urgency as D2 might be releasing the sum secured by the BG and that there is no prohibition against the grant of an ad-interim injunction against D1. [12] When the matter came up again on the next return date on 13 June 2016, the learned Senior Federal Counsel ("SFC"), Encik Hanir Ahmad, requested for time to file an affidavit to oppose the Application. This Court then fixed 22 July 2016 to hear the OS in Enclosure 1 as the prayers in Enclosure 11 are a subset of the prayers in Enclosure

[13] The ad-interim injunction granted was extended until the next hearing date of 22 July 2016. 7 Principles Whether there is any prohibition against granting an ad-interim injunction against the Government [14] Order 29 Rule 1 of the Rules of Court 2012 ("ROC") provides: "An application for the grant of an injunction may be made by any party to a cause or matter before or after the trial of the cause or matter, whether or not a claim for the injunction was included in that party’s originating process, counterclaim or third party notice, as the case may be." [15] Section 51(1) of the Specific Relief Act 1950 states as follows:

Temporary injunctions are such as are to continue until a specified time, or until the further order of the court. They may be granted at any period of a suit, and are regulated by the law relating to civil procedure. [16] The locus classicus on the law and guiding principles on interlocutory injunction is the House of Lord's case of American Cynamid Co v Ethicon Ltd [1975] 1 All ER 504 which have been adopted and applied time and again in our Courts. 8 [17] The principles propounded in the House of Lord were adopted and applied in the Court of Appeal case of Keet Gerald Francis Noel John v Mohd Noor Bin Abdullah & Ors [1995] 1 MLJ 193. Keet Gerald (supra) was recently reaffirmed in the Federal Court case of AV Asia Sdn Bhd v Measat Broadcast Networks Systems Sdn Bhd [2014] 1 CLJ 821. [18] In essence, the Court in granting the interlocutory injunction pursuant to Order 29 Rule 1 of the ROC must consider the factors as set out below:

whether the claim against the Defendant on the facts before the Court discloses a bona fide serious issue to be tried;

(ii) the Court must then proceed to consider the balance of convenience between parties, namely, whether the harm would be greater in granting the injunction or by its refusal and arrive at a finding which party would suffer greater injustice; and

(iii) whether damages is an adequate remedy. [19] I agree with learned counsel for the Plaintiff that although s 54(d) of the Specific Relief Act 1950 provides in general that an injunction cannot be granted to interfere with the public duties of the Government, s 29 of the Government Proceedings Act 1956 does not prohibit this court to grant 9 temporary or interlocutory injunctions against the Government. S 54(d) of the Specific Relief Act 1950 is under Chapter X under "OF PERPETUAL INJUNCTIONS" whereas s 51 which comes under Chapter IX and refers to injunctions generally draws a distinction between temporary injunctions and perpetual injunctions. It provides that a perpetual injunction can only be granted by the decree made at the hearing and upon the merits of the suit. [20] S 29(1)(a) of the Government Proceedings Act 1956 reads as follows: "29. (1) In any civil proceedings by or against the Government the court shall, subject to this Act, have power to make all such orders as it has power to make in proceedings between subjects, and otherwise to give such appropriate relief as the case may require: Provided that-

where in any proceedings against the Government any such relief is sought as might in proceedings between subjects be granted by way of injunction or specific performance, the court shall not grant an injunction or make an order for specific performance, but may in lieu thereof make an order declaratory of the rights of the parties;" (emphasis added) [21] If there has been doubts in the past as to whether an interlocutory or interim injunction lie against the Government, this has been clarified by the 10 Court of Appeal in Sabil Mulia (M) Sdn Bhd v Pengarah Hospital Tengku Ampuan Rahimah & Ors [2005] 2 CLJ 122, where Gopal Sri Ram JCA (later FCJ) held at page 134, para c-d as follows: “It has been settled since at least 1978 that s. 29 of the 1956 Act does not prohibit the grant of temporary injunctions against the Government. In Tengku Haji Jaafar & Anor v Government of the State of Pahang [1978] 2 MLJ 105 it was held that the section “does not take away therefore the right of the court to grant an interlocutory injunction”. This court in Kekatong Sdn Bhd v Danaharta Urus Sdn Bhd [2003] 3 CLJ 378 CA (refd) treated the ratio in Tengku Haji Jaafar & Anor v. Government of the State of Pahang as settled law. Although the Federal Court reversed our decision in that case on the constitutional point, our judgment on this point was approved sub silentio. Accordingly, it is too late in the day to argue that s. 29 bars the grant of an interlocutory or even an interim injunction against the Government.” [22] The Federal Court in Minister of Finance, Government of Sabah v Petrojasa Sdn Bhd [2008] 5 CLJ 321 at page 347 & 348 at para 71 has given tacit endorsement to this approach: 11 “[71] In that case the Court of Appeal held, inter alia, that the courts have jurisdiction to grant interim and permanent injunctions against any servant of the Government. It also held that it is too late in the day to argue that s. 29 of the GPA bars the grant of an interlocutory or even an interim injunction against the Government. That is not the issue before us, as such I would not venture to say anything more on this save that the courts have moved away from the traditional stand that no order of injunction may be granted against the Government.” (emphasis added) [23] This Court therefore was satisfied that there was no prohibition against the grant of an ad-interim injunction against the Government of Malaysia, and more so when the status quo needs to be preserved pending the disposal of the Application inter-parte or pending the hearing of the main action. At the hearing of the main action, no matter how justified the injunction is, the Court may only grant a declarative order declaring of the rights of the parties. [24] Learned SFC submitted that by virtue of Sec 29(2) Government Proceeding Act, the Court cannot issue an interim injunction against D1. He referred to Government of Malaysia v Lim Kit Siang [1988] 2 MLJ 12, where Salleh Abas LP stated as p. 19: 12 “... the issue of the interim injunction ... is absolutely contrary to the express words of Section 29 of the Government Proceedings Ordinance 1956, as it has in effect indirectly restrained the government...” [25] He also referred to Superintendent of Lands and Surveys Kuching Division & Ors v Kuching Waterfront Development Sdn Bhd [2009] 5 MLJ 607 where the Court of Appeal stated at p. 614: “[10] ... Even though the High Court has the discretion to grant it (i.e injunction), s 29 of the GPA does not permit the granting of any injunction against the government, and likewise s 54 of the Specific Relief Act has the same bar for any department of any government in Malaysia ... At p. 617 – 618: “[19] Needless to say the words of s 29(1)(a) of the GPA are quite clear and there is no reason to depart or whittle away what has been built into it. In Lim Kit Siang v United Engineers (M) Bhd & Ors [1987] 1(2) CLJ 195, the Supreme Court affirmed the view of the High Court judge as regards the express prohibition in s 29, though not the extension of its scope ...” 13 [26] Learned SFC further submitted that the principle again was affirmed recently by the Court of Appeal in Tan Bun Teet & Ors v Menteri Sains, Teknologi dan Inovasi Malaysia & Ors [2013] 2 CLJ 1115, Azahar Mohamed JCA (now FCJ) stated at p. 1117: “(3) ... Further, an injunction, interim/interlocutory or permanent, could not be granted against the government under s. 29 of the Government Proceedings Act 1956 (‘GPA’) and s. 54 of the Specific Relief Act 1950 (‘SRA’) (Lim Kit Siang v United Engineers (M) Bhd). If the relief sought for was granted, this would interfere with the public duty of the second respondent under the AELA and as such, s. 29 of the GPA protects the second respondent, being a public authority, from any form of injunctive orders.” [27] The learned SFC concluded that the above decisions clearly stated that even interim injunction cannot be issued against D1 and hence the declaration does not prohibit D1, from calling on the BG. However the Court of Appeal on an appeal from the High Court's decision on the 1st OS where the interim injunction is concerned, had dismissed the appeal of D1. It would seem that at the Court of Appeal level there is a divergence of views as to whether an interim injunction may be granted against the 14 Government or that it may only be granted at the interim stage but not as a final relief. [28] Where there is a conflict of 2 decisions of the Court of Appeal, the High Court is free to follow either one. His Lordship Abdul Aziz J (later JCA) in Yap Piew Chuan v. Araca Enterprise Sdn Bhd [1998] 2 CLJ 234, at 242-243, as follows: "As regards the affidavits, there are two conflicting pronouncements by the Court of Appeal on the question. In Perbadanan Nasional Insurance Sdn. Bhd. v. Pua Lai Ong [1996] 3 CLJ 321, the Court of Appeal, after considering a number of High Court decisions, confirmed the decision in Wing Tiek Holdings Bhd. v. Yong Chee Thiam & Anor [1994] 1 LNS 215; (to delete) [1994] 3 MLJ 379 that O. 32 r. 13(2)(b) applies to the affidavit in reply in a summary judgment application. In Structural Concrete Sdn. Bhd. & 3 Ors. v. Wing Tiek Holdings Berhad [1997] 1 CLJ 300; (to delete) [1997] 1 AMR 589, the Court of Appeal adopted the observation of the learned judge in PB Securities Sdn. Bhd. v. Abdul Rashid bin Mohamed [1994] 3 CLJ 209; (to delete) [1994] 2 AMR 33: 1694 to the effect that O. 32 r. 13(2) does not apply to the procedure for summary judgment. In view of the conflicting decisions, I shall adhere to my decision in Pelasari Sdn. 15 Bhd. v. Reebok Sdn. Bhd. & Anor in Guaman Sivil No. S3-22-303- [1994] (unreported), which I delivered on 18 July 1995, in which, after considering the conflicting High Court decisions in the Wing Tiek Holdings and the PB Securities cases, and giving my own reasons, I decided that O. 32 r. 13(2)(b), does not apply to affidavits in reply in O. 14 proceedings.". [29] As there is a conflict of decisions on this point, this High Court is at liberty to follow that which would yield a just and fair solution while awaiting the hearing of the final reliefs depending on the exigencies of each case and whether the conduct of the government has been egregious. This is one case where an ad-interim injunction ought to be given pending the hearing of the OS filed and the final reliefs claimed. [30] The Plaintiff here conceded that whilst a perpetual injunction may not be granted against the Government in the final reliefs prayed for, this Court may nevertheless grant a declaration in lieu of a perpetual injunction. Indeed the Plaintiff had only prayed for in the final reliefs a declaration that the second call on the BG by D1 is unconscionable and for consequential order that the BG be returned to the Plaintiff, having been procured by funds furnished by the Plaintiff. 16 Whether it would be unconscionable for the Government to make another call on the BG after a previous Court has declared that the first call is unconscionable [31] The Federal Court has placed beyond peradventure the proposition of law that unconscionability is a ground to restrain a beneficiary from calling on a BG as separate from fraud. In Sumatec Engineering and Construction Sdn Bhd v Malaysian Refining Company Sdn Bhd [2012] 4 MLJ 1, the Federal Court speaking through his Lordship Hamid Embong FCJ, endorsed the approach taken by the Court of Appeal as follows: “[17] The Court of Appeal used the following tests and principles in coming to its conclusion, in determining the issue at hand as found in the following passages from its judgment:

The principle concerning ‘unconscionability’ was initially propounded by Lord Denning in the case of Lloyds Bank v Bundy [1975] QB 326 where it was held that unconscionable transaction between parties may be set aside by the court of equity. This ‘unconscionable’ category is said to extend to all cases where unfair advantage has been gained by an unconscientious use of power by a stronger party against a weaker (see also Halsbury’s Law of England, (3rd Ed), Vol 17 [1956] at p 682). 17

(ii) On an application for relief against unconscionable conduct, the court looks to the conduct of the party attempting to enforce, or retain benefit of, a dealing with a person under a special disability in circumstances where it is not consistent with equity or good conscience that he should do so (see Commercial Bank of Australia Ltd v Amadio and Another [1983] 46 ALR 402).

(iii) In the Singapore High Court, Lai Kew Chai J in the case of Min Thai Holdings Pte Ltd v Suniable Pte Ltd & Anor [1999] 2 SLR 368 opined that ‘the concept of unconscionability involves unfairness, as distinct from dishonesty or fraud, or conduct so reprehensible or lacking in good faith that a court of conscience would either restrain the party or refuse to assist the party’.

(iv) It is not possible to define ‘unconscionability’ other than to give some very broad indications such as lack of bona fides. What kind of situation would constitute ‘unconscionability’ would have to depend on the facts of each case. This is a question which the court has to consider on each occasion where its jurisdiction is invoked. There is no pre-determined categorization (see Dauphin Offshore Engineering and Trading Pte Ltd v The Private Office of HRH Sheikh Sultan bin 18 Khalifa bin Zayed Al-Nahyan [2000] 1 SLR 657; and Shanghai Electric Group Co Ltd v PT Merak Energi Indonesia [2010] 2 SLR 329)

Based on the above considerations, we are of the view that there is no simple formula that would enable the court to ascertain whether a party had acted unconscionably in making a call on an on-demand performance bond or bank guarantee. In the final analysis, whether or not ‘unconscionability’ has been made out is largely dependent on the facts of each case. In every case where ‘unconscionability’ is made out, there would always be an element of unfairness or some form of conduct which appears to be performed in bad faith.

(vi) In Bocotra Construction Pte Ltd v AG (No. 2) [1995] 2 SLR 733, the Singapore Court of Appeal, stated that ‘a higher degree of strictness applies, as the applicant will be required to establish a clear case of fraud or unconscionability in the interlocutory proceedings. It is clear that mere allegations are insufficient’.” (emphasis added) 19 [32] With respect to the threshold test of a seriously arguable case, the Federal Court in Sumatec Engineering (supra) explained as follows: “[39] We are of the considered view that the 'seriously arguable and realistic inference' test as used by the learned judicial commissioner in Focal Asia is equally applicable to the extended exception of unconscionability. That test therefore needs to be applied to the relevant material facts before the court. The same test which results in a ‘strong prima facie case’ was utilized by the Court of Appeal at the intermediate appeal stage. And the Court of Appeal said this of the required burden now rested on the shoulder of Sumatec: As in the case of fraud, to establish ‘unconscionability’ there must be placed before the court manifest or strong evidence of some degree in respect of the alleged unconscionable conduct complained of, not a bare assertion. Hence, the respondent has to satisfy the threshold of a seriously arguable case that the only realistic inference is the existence of ‘unconscionability’ which would basically mean establishing a strong prima facie case. In other words, the respondent has to place sufficient evidence before the court so as to 20 enable the court to be satisfied, not necessarily beyond reasonable doubt, that a case of ‘unconscionability’ being committed by the beneficiary (the appellant) has been established to an extent sufficient for the court to be minded to order injunction sought. This additional ground of ‘unconscionability’ should only be allowed with circumspect where events or conduct are of such degree such as to prick the conscience of a reasonable and sensible man.” (emphasis added) [33] Applying the above test of unconscionability to the facts of this case, I would say that as a High Court in the 1st OS had declared that D1's call on the BG is unconscionable, it is not open for D1 to then again make another call on the BG as they did here. No Courts, especially a superior court, would act in vain. An order of the Court, even if it be wrong, must be complied with until it is set aside or stayed for the time being. Otherwise there would be chaos and anarchy. Ours is a government of laws and the decrees of a Court cannot be breached with impunity. No one is above the law and it applies equally to all whether they be the Government of the day or its subjects. [34] The learned SFC submitted that the declaration granted by the High Court in the 1st OS does not prohibit the D1 from calling on the BG. He stressed the fact that there is nothing in the order of the High Court 21 prohibiting D1 from calling on the BG. The learned SFC further extrapolated by arguing that the finding of the High Court is not to be construed as a prohibition or injunction as it will go against the settled law that no injunction can be issued against the Government. He referred to Section 29(2) Government Proceeding Act 1956 which reads:

The court shall not in any civil proceedings grant any injunction or make any order against an officer of the Government if the effect of granting the injunction or making the order would be to give any relief against the Government which could not have been obtained in proceedings against the Government. [35] He further argued that the above statutory provision does not just prohibit any injunction against government but it clearly stated any order in the effect of granting the injunction would also be prohibited. He then drove home what is the inexorable conclusion which is that if the said declaration is to be construed as prohibiting D1 from calling on the BG, it will be caught by this provision. He concluded on a confident note that the declaration was not ordered with the intention to prohibit or have the effect of an injunction against the Government. 22 [36] I must be pardoned for not being able to follow the logic of that line of argument. Surely the learned SFC is not suggesting that the declaration that the call on the BG is unconscionable has no effect whatsoever on D1. If that be so, then the learned SFC is in effect saying that whenever the Government is unhappy with a declaratory order, they will just have to do the very same act again in defiance of the declaratory order and there is nothing that could be done to prevent it for there can be no injunction against the Government. That would bring the order of the Court into disrepute as it now can be disregarded with impunity. [37] The learned SFC underscored the fact that a declaratory judgement is issued for the purpose of declaring a right and nothing more. He referred to the Federal Court case of Pengarah Tanah Galian dan Persekutuan v Sri Lempah Enterprise Sdn Bhd [1979] 1 MLJ 135, where Raja Azlan Shah Ag CJ Malaya (as His Royal Highness was then) stated at p. 149: “Secondly, all that a declaration does is to declare the rights of the parties, and the effect of making a declaration would be that it would give the Land Executive Committee an opportunity of having second thoughts at the problem” 23 [38] Indeed Suffian LP anticipated the question that would be raised by many and answered it astutely at pp 146-147 as follows: "Question 2 After holding that the Committee does not have the power it claims, should this court order it to approve the developer's applications but leave intact its freehold title? I do not think so. As was said by Lord Greene M.R. at page 685 in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] 2 All ER 685, the power of a court to interfere in these planning matters is not that of an appellate authority to override a decision of the approving authority, but is that of a judicial authority which is concerned, and concerned only, to see whether the approving authority has contravened the law by acting in excess of the powers which Parliament has confided in it. This statement was cited with approval by Lord Jenkins at page 521 in Fawcett Properties v Buckingham County Council [1960] 3 All ER 503. 24 I would therefore agree with my brother Raja Azlan Shah F.J. that these applications should be remitted for reconsideration by the Land Executive Committee in light of the law set out in this judgment. In reconsidering this matter, it is hoped that the Committee will bear in mind that, in our view, the letter of March 22, 1976, is not a mere letter containing counter-proposals, as contended by its counsel before us, but conveyed the Committee's decision approving the developer's applications, subject to the conditions set out therein, and that it is now too late for it to contend that the applicant had not complied with section 136(1)(b) of the Code, since the letter made no mention of this section nor of non-compliance with anything by the applicant. It should also be said that this is not an ordinary case of, say, padi land whose proprietor has unsuccessfully applied for the condition to be changed to commercial nor of, say, residential land whose proprietor has unsuccessfully applied for the condition to be changed, so that he can build a factory or other commercial building in a residential area. The land here is in a commercial zone, the City Planner has no objection to the proposed development, and the Land Executive Committee has approved the various applications of the applicant, and the developer has agreed to all the 25 conditions imposed, except the one which the trial judge and this court say the Committee has no right to insist on. In reconsidering these applications, the Committee should act fairly and not arbitrarily. There must be no bad faith and no dishonesty, though in fairness to everybody concerned nobody has suggested that on the part of the Committee. There must be no unreasonableness, no attention to extraneous circumstances, no disregard of public policy, and things of that sort — things mentioned by Lord Greene, M.R., at page 682 in Associated

Provincial Picture House v Wednesbury Corporation [1947] 2 All ER Above all, in the Malaysian context, the Committee should bear in mind avowed official policy to promote development, to provide as much housing as possible ("property-owning democracy"), that promptness in approval enables purchasers to acquire property and homes at more or less current prices, that delay in approval, on the other hand, apart from causing dissatisfaction and breeding corruption, leads to delay in completion of projects and forces purchasers to pay prices swollen over time by inflation, and hinders national development. It is a mistake to suppose that delay in approval harms developers. Delay inflates the value of their land and 26 they can get round increased building and other costs by simply passing them down to their customers. The order of the court is that the orders of the learned trial judge be set aside and instead there shall be an order that these applications be remitted for reconsideration by the Land Executive Committee in accordance with the law. What would happen if the Committee were to ignore the order of the court? As to this, I wish to make two observations. First, in my experience, no Government department or ministry has ever set the courts at defiance. Secondly, it would not be out of place to reproduce the following words from the judgment of the Privy Council at page 28 in Fischer v Secretary of State for India in Council (1898–99) 26 IA 16 : "But then, it was asked, what would happen if the Collector ignored the order of the Court? What remedy would the appellant have if he had omitted to ask for specific relief against the Collector? It is highly improbable that any officer of the Government would set the Court at defiance. It is impossible to suppose that the Government would countenance such conduct as that. But the 27 remedy in such a case, if it did occur, would be simple enough. Every order such as that which the appellant asks for carries with it liberty to apply. On a proper application and on proper notice being given it would be found that the arm of the Court would be long enough to reach the offender, whatever his position might be." (emphasis added) [39] I need not say more nor can I usefully add to what has been so succinctly said in all its stark seriousness. What was so remotely distant has now come to ruse at our very doorsteps. It is no less than setting the Court at defiance. This Court would not allow it! [40] Granted the Government of Malaysia is unhappy with the decision of the Court in the 1st OS. Like all litigants who are disappointed with a decision of the Court, the proper course is to appeal and this D1 has done. [41] In the event that D1 is successful on appeal, the declarative order of the High Court in the 1st OS would be set aside with the consequence that the first call on the BG is valid and the monies secured will have to be paid out to them. 28 [42] It cannot degenerate into a situation where the Government of Malaysia can make another call on the BG and the Plaintiff cannot do anything but to wring its arms and stand hapless and helpless because there was no injunction to restrain the Government of Malaysia to call on the BG but merely a declaration that the call is unconscionable. [43] The Plaintiff would have no alternative but to rush to Court to restrain another call on the BG and the same issues would have to be agitated again. I would say that res judicata does not apply in that the present call on the BG is a different call on the BG, being made on a different date. More importantly it was a call made on the BG after it has expired. [44] Here is a case where D1 having precipitated this situation where the Plaintiff has no choice but to come to the court again, D1 cannot then be heard to say that the Court should dismiss the Plaintiff's claim on ground of res judicata. It would be tantamount to saying that "head I win and tail you lose!" It was D1 itself that deliberately disregard the declarative order of the previous High Court Judge that has compelled the Plaintiff to come back to Court once again for protection. 29 [45] I am emboldened by the dicta of the Court of Appeal in Chee Pok Choy & Ors v Scotch Leasing Sdn Bhd [2001] 2 CLJ 321 pp 332-333 where it was clarified that a Court may decline to follow the doctrine of res judicata where to do so would lead to an unjust result. At pp 332-333 it was explained as follows by Gopal Sri Ram JCA (later FCJ): "Now, there is a dimension to the doctrine of res judicata that is not always appreciated. It is this. Since the doctrine (whether in its narrow or broader sense) is designed to achieve justice, a court may decline to apply it where to do so would lead to an unjust result. And there is respectable authority in support of the view I have just expressed. In Carl-Zeiss-Stiftung v. Rayner and Keeler Ltd and Others (No 2) [1966] 2 All ER 536 , 573, Lord Upjohn said: As my noble and learned friend, Lord Reid, has already pointed out there may be many reasons why a litigant in the earlier litigation has not pressed or may even for good reasons have abandoned a particular issue. It may be most unjust to hold him precluded from raising that issue in subsequent litigation (and see Lord Maugham LC's observations in 30 the New Brunswick case ([1938] 4 All ER at p 755; [1939] AC at p 21). All estoppels are not odious but must be applied so as to work justice and not injustice, and I think that the principle of issue estoppel must be applied to the circumstances of the subsequent case with this overriding consideration in mind. (emphasis added.) In Arnold v. National Westminster Bank Plc [1991] 2 AC 93, 109, Lord Keith of Kinkel expressed the following view: In my opinion your Lordships should affirm it to be the law that there may be an exception to issue estoppel in the special circumstance that there has become available to a party further material relevant to the correct determination of a point involved in the earlier proceedings, whether or not that point was specifically raised and decided, being material which could not by reasonable diligence have been adduced in those proceedings. One of the purposes of estoppel being to work justice between the parties, it is open to courts to recognise that in special circumstances inflexible application of it may have the opposite result, as was observed by Lord Upjohn in the passage which I have quoted above from his speech in the Carl-Zeiss case [1966] 2 All ER 536 at 573, [1967] 1 AC 853 at 947. (emphasis added.) 31 In a later passage, I find Lord Keith saying: Estoppel per rem judicatam, whether cause of action estoppel or issue estoppel, is essentially concerned with preventing abuse of process. In the present case I consider that abuse of process would be favoured rather than prevented by refusing the respondents permission to reopen the disputed issue. These views were very recently reaffirmed by the House of Lords in Johnson v. Gore Wood & Co (2000) (Unreported, speeches published on 14 December 2000). See, in particular the speech of Lord Bingham of Cornhill, at pp. 8-10 of the transcript. On the authorities discussed thus far, the principle comes to this. Whether res judicata in the wider sense should be permitted to bar a claim is a matter that is to be determined on the facts of each case, always having regard to where the justice of the individual and particular case lies." (emphasis added) [46] I am left in no doubt that the justice of this case requires this Court to hear the Plaintiff and to say in no uncertain terms to the Government of Malaysia that it cannot deliberately set the Court at defiance by 32 disregarding the Court's declarative order and then raise res judicata to bar the Court from hearing the Plaintiff once again. [47] At any rate such a call is unconscionable as a previous call had been made and declared by the Court in the 1st OS to be unconscionable. There is no change of circumstance that D1 has shown that would justify another call on the BG. This second call on the BG has all the elements of an unfair advantage that makes it unconscionable as just because an injunction could not be granted against the Government of Malaysia as a final relief but merely a declaration, it does not mean that the Government of Malaysia may leverage and latch on to this with the effect of denuding the Court's declarative order of its dictate altogether. It would be unconscionable to allow the Government of Malaysia here to undermine the Court's order declaring that the earlier call on the BG is unconscionable. [48] It is unconscionable as to allow a second call on the BG would be inconsistent with equity and good conscience in as much as it would be unfair and certainly lacking in good faith. [49] The learned SFC referred to the Court of Appeal’s decision in Superintendent of Lands and Surveys, Kuching Division & Ors v 33 Kuching Waterfront Development Sdn Bhd [2009] 6 CLJ 751 at p. 752- 753 where it was held as follows: “[2] Subject to certain statutory restrictions, a court may issue declaratory decrees pertaining to the status or right of any person entitled to any legal character, or to any right as to any property. He is entitled to institute a suit against any person denying, or interested to deny, his title to the character or right, and the court may in its discretion make a declaration that he is so entitled ... [8] Once the respondent had successfully established its rights vide the declaration action, it could sue for damages without impediment ...” [50] No doubt a person is entitled to sue for damages if there has been breach of a declarative order given in its favour. However that is not the only remedy and in a case that warrants it, like here, the Court is entitled to grant an ad-interim injunction to restrain a second call on the BG by the Government of Malaysia and in the hearing of the final relief, to grant the necessary declaration that the second call on the BG is unconscionable and to grant consequential reliefs. 34 [51] Learned SFC quoted from a book written by the Rt. Hon. The Lord Woolf (Lord Chief Justice of England and Wales) and Jeremy Woolf entitled ‘The Declaratory Judgement’, London Sweet & Maxwell [2002] at p 4. However he only quoted the words in bold below and I think for context and completeness, the whole passage should be included as set out below: “1.07 However, whilst the defendant is assumed to have respect for the law, justice does not rely on this alone. A declaration by the court is not a mere opinion devoid of legal effect: the controversy between the parties is determined and is res judicata as a result of the declaration being granted. Hence, if the defendant then acts contrary to the declaration, he will not be able to challenge the unlawfulness of his conduct in subsequent proceedings. By contrast the claimant may then again go to court, this time for damages to compensate for the loss he has suffered or to seek a decree to enforce the rights established by the declaration. A defendant, being aware of these consequences, will usually comply with the declaratory judgment. However, where the claimant has grounds to fear that the declaration will not be strictly observed, he may - in cases in which he is entitled to a remedy which can be enforced - claim additionally an award of damages, an order of 35 specific performance, an injunction or any other remedy to which he is entitled." (emphasis added) [52] Here in the OS the Plaintiff had prayed for in Enclosure 1 a further declaration that the BG had expired and that the monies secured by the BG be returned to the Plaintiff and further that the BG be returned together with copies of it to the Plaintiff for disposal. The Plaintiff is constrained to ask for these incidental reliefs as the Government of Malaysia has shown that it has no intention to abide by the declaration of the Court in the 1st OS that the call was unconscionable. [53] D1 cannot be heard to say that the Plaintiff is entitled to damages only for that would be undermining the very basis for the Court's earlier decision in the 1st OS in granting the injunction as damages would not be an adequate remedy and finally to grant the declaration prayed for by the Plaintiff. It would be a back door way of getting the same result what they could not get in the 1st OS! Whether there can be a valid call on the BG after it has expired [54] In Development Bank of Singapore Ltd v Eng Keong Realty Pte Ltd [1990] 3 MLJ 89 the Bank Guarantee that was procured by the second defendant contained a clause that the guarantee would be effective from 15 36 October 1987 to 14 April 1988 and was conditional upon a claim being made in writing and received by the plaintiffs on or before the expiry date, and thereafter the guarantee would automatically cease to have any effect whatsoever whether or not it was returned to the plaintiffs for cancellation. It was held by the Singapore High Court that since no valid demand had been made under the guarantee before the expiry date on 14 April 1988, the first defendants as beneficiary of the guarantee were no longer entitled to rely on it and the second defendants that procured the guarantee were entitled to the return of the monies put up as security with the plaintiff bank for the issuance of the bank guarantee. See also the case of Sigur Ros Sdn Bhd v Malayan Banking Bhd & Anor [2013] 8 CLJ 86 where it was held that as the BG had expired as of 21 March 2013 when D2 made a demand under it and as such D2 was not entitled to call on the BG. [55] In this case before the Court, any call on the BG shall be made before its expiry on 31 January 2015. D1 had already called on the BG on 26 January 2015. It was before the expiry of the BG on 31 January 2015. However D2 the Bank did not make any payment to D1 because of the interim injunction issued by the previous High Court pending the hearing of the 1st OS. After the hearing of the 1st OS the Court granted a declaration that the call on the BG was unconscionable. 37 [56] Hence, the learned SFC submitted, D1 cannot be faulted as there was an interim injunction against calling for the BG till disposal of the 1st OS. No one is talking about fault here. Like everyone going to Court or being brought to Court, sometime the decision is in one's favour and sometime the decision is against. One then would exercise one's right of appeal if the decision is not in one's favour and while awaiting appeal, one may apply for a stay of the order if it is an order amenable to stay. Generally a declarative order is not amenable to stay. See the case of Takako Sakao (f) v Ng Pek Yuen (f) & Anor (No.3) [2010] 2 MLJ 141 at para [6]. That is the position of the law for the time being and through no fault of D1, the Government of Malaysia. [57] The learned SFC submitted that the letter written by D1 on 26 May 2016 calling for the BG was only written after the disposal of the 1st OS. He further submitted that in any event, the first letter dated 26 January 2015 should be considered as the demand for the BG. [58] I agree that the first demand on the BG before the BG expired on 31 January 2015 is the demand that is in issue. That is the subject matter of the pending appeal in the Court of Appeal. If the appeal is in favour of D1 in that the first call is valid and not unconscionable, then the Bank would have to release the monies guaranteed under the BG to D1. To make another 38 call on the BG and this time after its expiry, is not just invalid and ineffective but also an abuse of the declarative order of the Court and an affront to the authority of the Court. It is axiomatic that obedience to an order of the Court is the foundation on which its authority is founded as was held in Re Jokai Tea Holdings Ltd [1993] 1 All ER 630. [59] Much has been argued by the learned SFC on the lack of locus standi of the Plaintiff to bring this action as the contract is between D1 and SD Com and the BG was taken out in the name of SD Com, though it is the Plaintiff that had provided the funds for the BG. Irrespective of the rightness of the decision of the High Court in the 1st OS action, that matter has been argued and dismissed. At any rate I am in agreement with observation of the High Court in the case of Sigur Ros Sdn Bhd v Malayan Banking Bhd & Anor [2013] 8 CLJ 86. There on a similar issue it was held by Nallini Pathmanathan J (now JCA) as follows: “[91] In short, both lines of cases recognise that s. 41 of the Specific Relief Act 1950 is not exhaustive in relation to the grant of declarations. Whether it be under O. 15 r. 16 of the Rules of Court 2012 (‘Rules of the High Court 1980’) or the inherent jurisdiction of the court, this court is entitled to look outside of s. 41 of the Specific 39 Relief Act in determining whether or not the plaintiff has locus standi to initiate this current originating summons in relation to the validity of the BG. The test, as I understand it, is whether the plaintiff has an interest in the subject matter of the dispute or whether the plaintiff’s interests would be ‘peculiarly affected’ by the call on the BG. [92] It is clear that the Plaintiff’s interests would be directly affected by an honouring of the BG because it is the Plaintiff’s funds that would be utilised to honour the BG. If the BG has indeed expired the plaintiff would be out of pocket of that sum. In these circumstances I am satisfied that the plaintiff has a valid and legitimate interest in the dispute pertaining to the validity of the BG. More significantly I am also satisfied that the Plaintiff’s interests would be peculiarly affected by the honouring of the BG and to that extent the plaintiff has locus standi or standing to bring the current originating summons. The fact that the plaintiff has no direct cause of action in respect of the BG does not preclude the plaintiff from seeking the declaratory relief because its interests are peculiarly affected.” [60] In the above case, the bank in question had already taken a stand not to honour the call of the BG because the BG had expired. In the case 40 before this Court, D2 had verbally informed the Plaintiff that they have agreed to honour the call of the BG despite its expiry in January 2015. This Court cannot stand idly by in the face of an application for an ad-interim injunction pending the hearing of the OS and thereafter for a declaration that the second call on 26 May 2016 is unconscionable. To accede to D1's arguments that the Plaintiff's application ought to be dismissed would be an affront to the authority of the Court, undermining its dignity and rendering its previous sanction superfluous and its order otiose. This the Court would not allow. Pronouncement [61] For the reasons given above, this Court granted a declaration that the call by D1 on the BG on 26 May 2016 is unconscionable and that in any event the BG had expired and become void upon its expiry on 31 January

To ensure no further call on the BG again, D1 is the return the original copy of the BG together with all duplicate copies of it to the Plaintiff forthwith for its cancellation. I also ordered costs of RM10,000.00 to be paid by D1 to the Plaintiff. [62] As D2 had agreed to abide by any order of this Court, the Plaintiff had discontinued its action against D2. 41 [63] As a matter of postscript there was a subsequent application of D1 to stay the order for the return of the BG to the Plaintiff and the Plaintiff had graciously agreed to the stay pending the disposal of the appeal in the Court of Appeal. Dated: 14 October 2016. - signed - Y.A. LEE SWEE SENG Judge Construction Court Kuala Lumpur For the Plaintiff : Shahir Abd Razak, Abdullah Khubayb and C K Foong (Messrs Foong & Tan ) For the Defendant: SFC Ahmad Hanir Hambaly @ Arwi (Attorney General's Chambers)