Sigma Elevator (M) Sdn. Bhd. v Pembinaan Yuen Seng Sdn Bhd (WA-24C(ARB)-28-07/2022)

(M) Sdn Bhd dan Pembinaan Yuen Seng Sdn Bhd Dan Dalam perkara Prosiding Timbang Tara Pertubuhan Arkitek Malaysia (PAM) No. ADM/ARB/36-780/2020 Antara Sigma Elevator (M) Sdn bhd dan Pembinaan Yuen Seng Sdn Bhd Dan Dalam Perkara Award Muktamad Timbang Tara Bertarikh 30.3.2022 oleh AR Menaha Ramanath Dan Dalam pekara Seksyen 38 Akta Timbang Tara 2005 Dan Dalam perkara Aturan 7, Aturan 69 dan Aturan 92 Kaedah 4 Kaedah-Kaedah Mahkamah 2012 27/03/2023 08:30:48 WA-24C(ARB)-28-07/2022 Kand. 23 ANTARA SIGMA ELEVATOR (M) SDN BHD (No. Syarikat: 414986-V) …PLAINTIF DAN PEMBINAAN YUEN SENG SDN BHD (No. Syarikat: 489470-H) …DEFENDAN Di Dengar Bersama DALAM MAHKAMAH TINGGI MALAYA DI KUALA LUMPUR DALAM NEGERI WILAYAH PERSEKUTUAN, KUALA LUMPUR SAMAN PEMULA NO. WA-24C(ARB)-29-07/2022 Dalam perkara mengenai antara Sigma Elevator (M) Sdn Bhd dan Pembinaan Yuen Seng Sdn Bhd Dan Dalam Perkara Award Muktamad oleh Yang Bijaksana Penimbangtara AR Menaha Ramanath Dan Dalam perkara mengnai Seksyen-Seksyen 37(1)(b)(ii) dan 37(2)(b) Akta Timbangtara 2005 Dan Dalam perkara mengenai Aturan 69 Kaedah 5 dan Aturan 92 Kaedah 4 Kaedah-Kaedah Mahkamah 2012 ANTARA PEMBINAAN YUEN SENG SDN BHD (No. Syarikat: 489470-H) …PLAINTIF DAN SIGMA ELEVATOR (M) SDN BHD (No. Syarikat: 414986-V) …DEFENDAN GROUNDS OF JUDGMENT (Enclosure 1) Introduction

In the Originating Summons No. WA-24C(ARB)-28-07/2022 (OS 28), the Plaintiff therein, Sigma Elevator Sdn Bhd (“SESB”) had applied to this Court for an order that the Arbitration Award dated 30.3.2022 (Award) delivered by the Learned Arbitrator, (Arbitrator) be recognised and enforced against Pembinaan Yuen Seng Sdn Bhd (“PYS”) pursuant to section 38 of the Arbitration Act 2005 and Order 69 rules 2, 4 and 8 of the Rules of Court 2012.

In the next Originating Summons No. WA-24C(ARB)-29-07/2022 (“OS 29”) , which was heard together with OS 18, PYS had applied to this Court via enclosure 1 thereto that the Award be set aside. Background Summary

PYS is the main contractor for a project known as “Cadangan Tambahan dan Perubahan kepada satu blok Komplex Perdagangan 10 Tingkat dengan satu Tingkat Basemen (Sedia Ada) di atas Lot 3803, Batu 6 Jalan Cheras, Mukim Petaling, Kuala Lumpur untuk Tetuan Maylang Century Sdn Bhd (“the Project”).

By Letter of Award dated 14.6.2011 PYS (the Respondent in the Arbitration) had appointed SESB (the Claimant in the Arbitration) as the Nominated Sub Contractor for escalator and travelator services in respect of the said Project for the contract sum of RM4,228,800.00 (“the Letter of Award”).

The relevant parties in respect of the said Project are as follows: Employer : Mayland Century Sdn Bhd M & E Consultant : Jentrikon Perunding Sdn Bhd Architect : SAM Arkitek Perunding

The Letter of Award is subject to the terms and condition of PAM Sub-Contract 1998 (Without Quantities).

SESB initiated this arbitration proceeding against PYS to claim for variation order No. 1 to No. 6 amounting to RM607,920.00 and balance contract sum of RM21,421.62.

PYS had disputed SESB’s claim as the alleged variation works, among others, were allegedly not instructed by PYS and/or are outside the scope of the Letter of Award. It is further submitted by PYS that some of the variation/additional works were instructed by different Contractors and/or the Employer themselves for which PYS is not responsible.

PYS had a counter claim against SESB for (i) a declaration that Variation Order No. 1 to No. 5 are outside the ambit of the Letter of Award and (ii) rectification costs of the defective works. Contentions and Findings VO No. 2

It was contended by PYS that the Award should be set aside as there are inter alia issues pertaining to the Variation Order No.2 (VO 2) when the Arbitrator had erred in law and in fact when she had directed at paragraph 4.18 of the Award that “the Claimant is eligible to be issued Variation Order No.2…for the amount of RM140,000…since the Claimant has completed top supply and install the safety brush for escalators Nos E01- to E30…” by relying on clause 22.4 (iii) of the PAM Sub Contract.

In this respect it was argued by PYS that the Arbitrator had failed to direct her mind to:

(i) the Engineers Instructions dated 5.11.2012 (Engineers Instructions 5.11.2012) which can be found in enclosure 2 of OS 29 whereby the instructions for VO 2 was given by Mayland Avenue Sdn Bhd (“Mayland Avenue”)

PYS had also argued that CW 1 and CW 2 had admitted to the above in cross examination and that any claim vis a vis VO 2 ought to be made against Mayland Avenue and/or Mayland Century Sdn Bhd and that SESB had premised its claim against but that SESB had issued a quotation for VO 2 to Mayland Century Sdn Bhd and the Plaintiff, which would lead to a double claim by SESB with regards VO 2.

It was then contended by PYS that there is no basis for such a claim and that the Arbitrator had acted in breach of natural justice and/or had exceeded her jurisdiction in making such directions in respect of VO 2 against Mayland Avenue.

In this respect, SESB had argued that:

(a) VO 2 comprises works required by JKKP wherein clause 14.5 of the LOA dictates that SESB must ensure compliance with the same and that there is a letter from SESB to PYS dated 2.5.2013 regarding the Engineer’s instructions for brushes

(b) SESB’s witnesses by the name of Gary Tan and John Chong, who were involved in payments and claims, had testified that VO 2 was only claimed against PYS

I have now had the opportunity to peruse the Award, which can be found at exhibit CCY-12 of enclosure 3 in OS 29 and found that at paragraph 4.18 of the Award, the Arbitrator had dealt with the issue of VO 2 under the heading “The Issue of Variation No.2” where the Arbitrator had inter alia considered and decided that:

(i) there was an Engineer’s Instructions (EI) dated 5.11.2012 to SESB to supply and install safety brush for escalators Nos E01 to E30 as requested by Mayland Century Sdn Bhd

Thereafter the Arbitrator had decided that SESB is ‘eligible to be issued the Variation Order No. 2…”.

I therefore find that PYS submissions on this has not been proven and I agree with SESB’s learned counsel that the Arbitrator’s findings were rooted in the evidence submitted. VO No. 5

In respect of Variation Order No. 5 (VO 5), it was argued by PYS that the Arbitrator had not given due consideration to the contents of the Engineer’s letter dated 28.3.2018 which had recorded a refusal to certify VO 5 as it was outside the ambit and scope of the LOA. To this SESB had contended that the Arbitrator had considered this point and I was referred to and did find that the same was addressed, considered and eventually decided by the Arbitrator at various parts of the Award and in particular at paragraph 4.21 of the Award where the Arbitrator had amongst others alluded to SESB’s letter of 25.4.2014 to Mayland Century Sdn Bhd which was copied to PYS and the PAM Sub Contract clause 22.4(iii) when holding that SESB is eligible to VO 5 and the amount of RM47,640 therein in respect of the repair, test and commission of Travelator No. 5. VO No. 6

As for Variation Order No. 6 (VO 6), it was contended by PYS that the Arbitrator had erred in allowing SESB’s claim, for the sum of RM47,640 which PYS states was purportedly issued after the completion of the sub contract i.e 26.5.2014.

I have considered SESB’s submissions on this point and find that the Arbitrator had taken into account, inter alia, SESB’s letter of

22.9.2014 to Mayland Century Sdn Bhd quoting the sum of RM56,300 to supply and install travellator brush for nos 1 -5 and 18 sets of safety triangle for travelator and escalator at paragraph 4.22 under the heading “The Issue of Variation No.6” as well as the fact that there was no evidence of all the works being completed before 3.10.2014 which is the date of the Employer’s Purchase Order no. 6 and therefore held that SESB was entitled to the same in accordance with PAM Sub Contract clause 22.4(iii) and LOA Clause 14.1 Issues Pertaining To The Amount Of RM607,920 Claimed

PYS had also contended that the Arbitrator in awarding the amount of RM607,920 claimed for Variation Works had failed to consider in summary amongst others

(i) Clause 5.7 of the LOA

The said issues pertaining to the amount of RM607,920 claimed which consists of variation works (VO Works) were pleaded by SESB in its Statement of Case at paragraphs 8 to 15. This can be found in enclosure 2, Exhibit CCY-5 in OS 29.

As mentioned earlier on above in my said Grounds herein, the Arbitrator had considered the sum of RM607,920 and determined the same with regards Variation no. 1 to Variation no. 6 at paragraph 4.17 to 4.22 of the Award as shown in OS 29 at enclosure 3, Exhibit CCY-12.

From the documents before this Court, I agree with SESB’s learned counsel that PYS had only disputed VO’s 2,5 and 6 and not VO’s 1, 3 and 4 and as such were now taking, with respect, a conflicting and inconsistent position.

After reading the Award at paragraphs 4.17 to 4.22, I do hold that the Arbitrator had duly considered the LOA and held that the same were variations pursuant to clause 14.1 of the LOA as a variation to the sub contract thereto.

I have further examined Clause 5.7 of the LOA which to this Court shows that the same is a back to back payment clause. The said Clause 5.7 of the LOA reads: “Period of Honouring Certificate of Payment shall be ...37 days from the date of receiving Architects certificate by Employer. Payment shall be made within... 7 days subject to our receipt of payment from Employer based on certification of your work done”

Be that as it may, the Arbitrator was therefore correct to hold that PYS is liable to pay SESB based on her finding that “there was no evidence to reject the amount” and that SESB was “required to comply with the mandatory JKKP requirements” as stated in the Award at various points in paragraphs 4.17 to 4.22 of the Award.

As the Arbitrator had considered all the facts and circumstances leading to her decision on this issue, I hold that the alleged failure by the Arbitrator, as contended by learned counsel for PYS, to request the witnesses to give the requisite material evidence in this regard is misguided and must be dismissed as it is the Arbitrator who is the sole determiner as to the evaluation of the evidence and findings of fact: see Top Speed Holding Sdn Bhd v. Conlay Construction Sdn Bhd [2011] 12 MLRH 979; Kerajaan Malaysia v. Perwira Bintang Holdings Sdn Bhd [2015] 2 MLRA 92; [2015] 6 MLJ 126; [2015] 1 CLJ 61.

I further hold that the Arbitrator’s grounds on the issue pertaining to the amount of RM607,920 claimed was based on evidence before her and the inferences to be drawn therefrom and on this I take guidance and also wish to refer to Pancaran Prima Sdn Bhd v Iswarabena Sdn Bhd and another appeal [2021] 1 MLJ 1 where the Federal Court had in that case held: “[108] Given the evidence before the arbitral tribunal, the question of the arbitrator having relied on ‘extraneous evidence’ which he ‘invented’ or ‘thought up’ of the 10–15% no risk profit norm for P&A in the Malaysian construction industry as alleged by the respondent does not arise at all. As such, the question of the arbitrator having breached the rules of natural justice by failing to give the parties the opportunity to submit on the norm also does not arise. [109] Even if the learned arbitrator was wrong in not giving the parties the opportunity to submit on the 10–15% no risk profit norm for P&A, we do not consider the breach to be of such gravity and materiality that the respondent can be said to have been denied due process under s 20 of the Act. It would not in our view have affected the outcome of the learned arbitrator’s decision on the loss of profit award. [110] It is clear to us that the arbitrator’s loss of profit ruling was based on evidence before him and the inferences to be drawn therefrom.”

There is therefore no issue of the Arbitrator having erred in law in her decision on this issue of awarding the amount of RM607,920 claimed for Variation Works. Natural Justice

It was contended by learned counsel for PYS that the term ‘natural justice’ includes a duty to act fairly as stated by the learned author Ananda Krishna in the text “Words, Phrases & Maxims, Legally & Judicially Defined, Volume 11, M, N and O” as well as ‘minimum standards of fair decision making”.

It must be borne in mind that for an Award to be set aside, Section 37 of the Arbitration Act 2005 has provided as follows: 1) An award may be set aside by the High Court only if:

(a) the party making the application provides proof that:

(i) a party to the arbitration agreement was under any incapacity;

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

(b) the High Court finds that:

(i) the subject-matter of the dispute is not capable of settlement by arbitration under the laws of Malaysia; or

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

(b) a breach of the rules of natural justice occurred:

(i) during the arbitral proceedings; or

I am also acutely aware of Section 8 of the Arbitration Act 2005 which provides that:- “No court shall intervene in matters governed by this act, except where so provided in this act “.

This Court also therefore notes that the Federal Court in Pancaran Prima Sdn Bhd v Iswarabena Sdn Bhd & Anor Appeal [2020] 6 MLRA 124 had held: “[8] Section 8 of the Act enshrines the principle of minimal interference by the court, which is an ingrained aspect of the United Nations Commission on International Trade Law (UNCITRAL) Model on International Commercial Arbitration. See Kerajaan Malaysia v. Perwira Bintang Holdings Sdn Bhd [2015] 2 MLRA 92; [2015] 1 CLJ 617; [2015] 6 MLJ 126 CA which was cited with approval by this court in Far East Holdings Bhd & Anor v. Majlis Ugama Islam Dan Adat Resam Melayu Pahang & Other Appeals [2018] 1 MLRA 89; [2018] 1 CLJ 693; [2017] 8 AMR 313; [2018] 1 MLJ 1. [9] This court in the recent case of Jan De Nul (Malaysia) Sdn Bhd & Anor v. Vincent Tan Chee Yioun & Anor [2019] 1 MLRA 91; [2019] 1 CLJ 1; [2019] 2 MLJ 413 made the following observations on the effect of ss 8, 9, 37 and 42 of the Act: "The effect of ss 8, 9, 37 and 42 of the AA 2005 is that the court should be slow in interfering with or setting aside an arbitral award. The court must always be reminded that constant interference of arbitral award will defeat the spirit of the AA 2005 which for all intent and purposes, is to promote one- stop adjudication in line with the international practice (see: AJWA For Food Industries Co (MIGOP) Egypt v. Pacific Inter-Link Sdn Bhd & Another Appeal [2012] 3 MLRA 383; CLJ_2013_2_395; Taman Bandar Baru Masai Sdn Bhd v. Dindings Corporations Sdn Bhd [2009] 4 MLRH 171; [2010] 5 CLJ 83 and Lesotho Highland Development Authority v. Imprigelo SpA & Others [2005] UKHL 43). In this regard, the court needs to recognise the autonomy of the arbitral process by encouraging finality; and its advantage as an efficient alternative dispute resolution process should not be undermined." [Emphasis Added] [10] The principle is trite that courts do not exercise appellate jurisdiction over arbitration awards; see Pembinaan LCL Sdn Bhd v. SK Styrofoam (M) Sdn Bhd [2007] 1 MLRA 251; [2007] 4 MLJ 113; [2007] 3 CLJ 185. The only provisions in the Act that provide for the setting aside of domestic awards are s 37(1) and s 42(1) to (4) of the Act (before its deletion).”

However in Master Mulia Sdn Bhd v. Sigur Rus Sdn Bhd [2020] 9 CLJ 213, the Federal Court had also in an illuminative judgment in considering the effects and the law on section 37 of the Arbitration Act 2005 had held: “[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 to the court was intended to confer a wide discretion dependent on the nature of the breach and its impact. Therefore, the materiality of the breach and the possible effect on the outcome are relevant factors for consideration by the court; and Eighth, whilst materiality and causative factors are necessary to be established, prejudice is not a pre-requisite or requirement to set aside an award for breach of the rules of natural justice. [54] Underlying these guiding principles is the policies and objectives of the New York Convention and the Model Law. As a matter of principle and policy, the courts will seek to support rather than frustrate or subvert the arbitration process. The role of courts in the arbitral regime in general is one of assistance supportive of the arbitral process and not one of interference with it. Bearing in mind the two primary objectives of the Model Law (respect for and preservation of party autonomy and ensuring procedural fairness), the courts do not review the merits of the arbitral tribunal's decision.”

I therefore hold, after considering the facts before me and the case laws cited above, that the allegation by PYS that the Arbitrator had not given due consideration to the issues raised by them as mentioned above does not come within the matters stated in section 37 of the Arbitration Act 2005, more so when the Arbitrator had, as mentioned in my grounds herein and at the risk of being repetitious, considered the issues in totality before coming to his decision. Decision

I whole heartedly agree with my learned brother Lim Chong Fong J in JY Creative Sdn Bhd v Meacs Construction Sdn Bhd [2022] 1 LNS 945 and adopt his reasoning for the matter herein, where His Lordship in that case had held: “[26] I reiterate my conclusions therefrom that it is hence generally discerned that the sanctity of the arbitral award is always preserved by the courts. Intervention is the exception rather than the norm. With the abolition of s. 42 of the AA, there can be no appeals whatsoever against any error in an arbitral award even on questions of law. The limited avenue of intervention under s. 37 of the AA is confined to grounds of non-arbitrability of the dispute, non-submission to arbitration by the parties, serious procedural injustice or an arbitral award made in conflict with public policy that manifestly shocked the conscience. That notwithstanding, the applicant must also comprehensively specify its grounds of challenge as stipulated in Order 69 rule 3 of the Rules of Court 2012.”

Bearing in mind the above considerations which this Court must undertake in deciding to set aside the Award under section 37 of the Arbitration Act 2005 as well as the sanctity of arbitral awards and my findings above, I hold that there has been no evidence of breach of natural justice as set out in Master Mulia Sdn Bhd (supra) and I do hereby hold that the claim under OS 29 to set aside the Award be dismissed with costs and that OS 28 be allowed and I hereby grant Order In Terms of prayers (a), (b) (i), (ii) (iii), (iv) and (v) as well as prayer (c) thereto. Dated: 30th day of December 2022 t.t. NADZARIN WOK NORDIN JUDGE CONSTRUCTION COURT 1 KUALA LUMPUR COUNSEL FOR THE PLAINTIFF: Andrew Davis [Messrs Andrew Davis & Co.] COUNSEL FOR THE DEFENDANT: Deepak Mahadevan [Messrs Azmi Fadzly Maha & Sim]