Sqa Builders Sdn Bhd v 1. ) Luxor Holdings Sdn Bhd (BA-24C(ARB)-8-08/2021)

1.

… DEFENDANTS

1.

… PLAINTIFFS … DEFENDANT

1.

… PLAINTIFFS … DEFENDANT ORIGINATING SUMMONS NO: BA-24C(ARB)-14-12/2021 …

1.

… DEFENDANTS JUDGMENT (Four originating summonses)

This judgment concerns the following four originating summonses (4 OS):

in Amended OS no. BA-24C(Arb)-8-08/2021 (OS No. 8), SQA Builders Sdn. Bhd. (SQA) has applied for, among others, the following orders against Luxor Holdings Sdn. Bhd. (LH) and Luxor YRM Sdn. Bhd. (LY) -

an order under s 38(1) of the Arbitration Act 2005 (AA) to recognize a final arbitral award dated 30.7.2021 (Award) made by an arbitrator, Dato’ Ar. Kevin Woo Thin Fook (Arbitrator), to be binding and be enforced by entry as a judgment in terms of the Award;

a declaration that SQA is entitled to the following two amounts which had been adjudicated under the Construction Industry Payment and Adjudication Act 2012 (CIPAA) as follows -

a sum of RM1,884,254.34 [Adjudicated Amount (SQA-LH)] which had been adjudicated in an adjudication decision dated 5.9.2017 by Ms. Savithiri A/P Ganesan to be paid by LH to SQA [Adjudication Decision (SQA-LH)]; and

(ii) a sum of RM474,726.73 [Adjudicated Amount (SQA-LY)] which had been adjudicated in an adjudication decision dated 25.8.2017 by Encik Md. Lotefi Bin Abd. Latif to be paid by LY to SQA [Adjudication Decision (SQA-LY)]. This judgment shall refer to the Adjudicated Amount (SQA-LH) and Adjudicated Amount (SQA-LY) as the “2 Adjudicated Amounts”;

an order that LH shall refund, return and/or pay the Adjudicated

an order that LY shall refund, return and/or pay the Adjudicated

OS no. BA-24C(Arb)-9-09/2021 has been filed by LH and LY against SQA (OS No. 9). OS No. 9 refers ten questions of law [10 Questions (OS No. 9)] to this court pursuant to s 42(1) AA;

LH and LY have also filed OS no. BA-24C(Arb)-10-09/2021 against SQA to set aside the Award under s 37(1)(a)(iv), (v), (b)(ii), (2)(b)(i) and/or (ii) AA (OS No. 10); and

OS no. BA-24C(Arb)-14-12/2021 has been filed by SQA against LH and LY (OS No. 14) for, among others, an order to tax the costs [Costs (Arbitration)] of the arbitral proceedings (Arbitration)

SQA was appointed by way of two contracts (2 Contracts) to perform certain construction work (Works) in a project known as “Building Works for the Proposed Industrial/Office Development on Lot PT9922, Jalan Teknologi, Kota Damansara, PJU 5, Daerah Petaling, Selangor Darul Ehsan” (Project). The 2 Contracts are as follows:

in a “Letter of Award” (LA) dated 27.11.2012, LH appointed SQA to perform the Works regarding Lot 1 in the Project (1st Contract). The value of the 1st Contract was RM28,781,205.48; and

in LA dated 27.11.2012, LY appointed SQA to perform the Works on Lots 2 and 3 in the Project for a sum of RM10,718,794.52 (2nd Contract).

The 2 Contracts provided for the application of the “Agreement and Conditions of PAM Contract 2006 (Without Quantities)” (PAM Contract 2006). The PAM Contract 2006 had provided for “The Conditions of Contract” (COC). There were arbitration agreements in clause 34 COC in the 2 Contracts.

Disputes regarding the 2 Contracts arose between SQA on the one part and LH and LY on the other part [Disputes (2 Contracts)]. B(1). Adjudication proceedings 5. SQA commenced the following two adjudication proceedings under

SQA claimed for payment for Works done in the Project under the 1st Contract which had not been paid by LH (1st Adjudication Proceedings). In the 1st Adjudication Proceedings, the Adjudication Decision (SQA-LH) was made wherein LH was adjudicated to pay the Adjudicated Amount (SQA-LH) to SQA; and

in the second adjudication proceedings, SQA claimed that LY had not paid for Works performed by SQA in the Project pursuant to the 2nd Contract (2nd Adjudication Proceedings). The Adjudication Decision (SQA-LY) was delivered in the 2nd Adjudication Proceedings, namely, LY was adjudicated to pay the Adjudicated Amount (SQA-LY) to SQA.

With regard to the Adjudication Decision (SQA-LH) and Adjudication Decision (SQA-LY) (collectively referred to in this judgment as the “2

LH and LY had applied to the High Court to set aside the 2 Adjudication Decisions [2 Setting Aside Applications (2 Adjudication Decisions)];

SQA had applied for leave of the High Court to enforce the 2 Adjudication Decisions [2 Enforcement Applications (2 Adjudication Decisions)];

the High Court had decided as follows -

the 2 Setting Aside Applications (2 Adjudication Decisions) were dismissed; and

the 2 Enforcement Applications (2 Adjudication Decisions) were allowed [High Court’s Decisions (2 Adjudication Decisions)]; and

LH and LY appealed to the Court of Appeal against the High Court’s Decisions (2 Adjudication Decisions) and these appeals were allowed by the Court of Appeal on 26.3.2021 [Court of Appeal’s Decisions (2 Adjudication Decisions)]. By virtue of the Court of Appeal’s Decisions (2 Adjudication Decisions), the 2 Adjudication Decisions and High Court’s Decisions (2 Adjudication Decisions) were set aside. B(2). Arbitration 7. By way of two letters to SQA, each dated 26.9.2017, LH and LY had requested for the Disputes (2 Contracts) to be referred to arbitration [2 Notices To Arbitrate (26.9.2017)].

In the Arbitration -

with regard to the 1st Contract -

LH alleged as follows, among others -

on 7.12.2016, the Project’s Quantity Surveyor, Messrs “Juru Kos” (QS), had issued to SQA an amended “Statement of Final Account” in respect of the Works performed by SQA under the 1st Contract [QS’s SFA (1st Contract)]. By reason of clause 30.10(b) COC, LH contended that SQA was bound by QS’s SFA (1st Contract);

(ii) QS’s SFA (1st Contract) stated, among others, that LH only owed a total sum of RM1,041,655.45 to SQA for the Works and after deducting the “Second Moiety” amount (part of the Retention Fund) of RM719,530.14 (to pay for the rectification of defects in SQA’s Works) [2nd Moiety Sum (1st Contract)], the QS only proposed a sum of RM322,125.31 to be paid by LH to SQA [Alleged Sum Due To SQA (1st Contract)];

(iii) the Project’s architect, Messrs Prisma Architect (Architect), had granted four extensions of time (EOT) for SQA to complete the Works [4 EOTs (1st Contract)]. According to LH, the 4 EOTs (1st Contract) were invalid and there was therefore delay in the Works by SQA [Alleged SQA’s Delay (1st Contract)];

(iv) as a result of the Alleged SQA’s Delay (1st Contract), LH claimed liquidated damages (LD) from SQA in a sum of RM3,980,000.00 [LD (1st Contract)] [based on the rate of RM10,000.00 per day of delay as provided in clause 8(c) in the LA for the 1st Contract];

the Works performed by SQA were defective [Alleged Defective Works (1st Contract)]. Consequently, LH had to incur an amount of RM608,698.00 [Rectification Cost (1st Contract)] to remedy the Alleged Defective Works (1st

(vi) taking into account the Alleged Sum Due To SQA (1st Contract), LD (1st Contract) and Rectification Cost (1st Contract), SQA owed a sum of RM1,105,133.54 to LH under the 1st Contract [LH’s Claim (1st Contract)]; and

SQA resisted LH’s Claim (1st Contract) and counterclaimed from LH as follows, among others [SQA’s Counterclaim (1st

a total sum of RM3,161,439.15 had been certified by the Architect to have been performed by SQA [Certified Sum (1st Contract)];

(ii) SQA had performed additional Works at the request of LH [Variation Works (1st Contract)];

(iii) as the “Defect Liability Period” had expired on 1.8.2016, SQA was entitled to a return of the 2nd Moiety Sum (1st Contract) from LH;

(iv) the Architect should have granted EOT to SQA up to the date of the issuance of the “Certificate of Practical Completion” on 2.2.2015 [CPC (1st Contract)]. Hence, SQA was entitled to claim for “Loss and Expense” from LH [SQA’s Loss Due To EOT (1st Contract)]. SQA had provided two bases for the computation of SQA’s Loss Due To EOT (1st Contract); and

SQA was entitled to be paid the Adjudicated Amount (SQA-LH) by LH; and

in respect of the 2nd Contract -

LY had claimed as follows from SQA, among others [LY’s Claim (2nd Contract)] -

SQA was bound by the QS’s amended SFA issued on 7.12.2016 in respect of the Works performed by SQA under the 2nd Contract [QS’s SFA (2nd Contract)];

(ii) on 20.9.2017, the Architect had issued a “Final Certificate” to SQA [Architect’s FC (2nd Contract)] which stated that LY only owed a sum of RM314,700.69 to SQA and this sum included the second moiety amount of RM162,624.50 [2nd Moiety Sum (2nd Contract)]. According to LY, the Architect’s FC (2nd Contract) was final and conclusive;

(iii) SQA had already claimed from LY for the 2nd Moiety Sum (2nd Contract) in the 2nd Adjudication Proceedings and the Adjudicated Amount (SQA-LY) included the 2nd Moiety Sum (2nd Contract);

(iv) SQA was given two EOTs for Works regarding Lot 2 [2 EOTs (Lot 2)]. LY disputed the validity of 2 EOTs (Lot 2). Accordingly, LY averred that SQA had delayed in the completion of the Works for Lot 2 [Alleged SQA’s Delay (Lot 2)]. For the Alleged SQA’s Delay (Lot 2), LY claimed LD from SQA amounting to RM833,450.00 [based on the rate of RM3,950.00 per day of delay as provided in clause 8(c) in the LA for the 2nd Contract] [LD (Lot 2)];

the Architect had given two EOTs for Works regarding Lot 3 [2 EOTs (Lot 3)]. Despite the 2 EOTs (Lot 3), there was a delay by SQA in the completion of the Works for Lot 3 [Alleged SQA’s Delay (Lot 3)];

(vi) LY did not accept the 2 EOTs (Lot 3) and claimed LD from SQA in a sum of RM683,400.00 Lot [based on the rate of RM2,550.00 per day of delay in accordance with clause 9(c)(ii) in the LA (2nd Contract] [LD (Lot 3)]; and

(vii) taking into account the Architect’s FC (2nd Contract), LD (Lot 2), LD (Lot 3) and LY’s payment of the Adjudicated Amount (SQA-LY) [which included the 2nd Moiety Sum (2nd Contract)], SQA owed a sum of RM1,519,235.55 to LH under the 2nd Contract; and

LY’s Claim (2nd Contract) was denied by SQA. Additionally, SQA counterclaimed from LY as follows, among others [SQA’s Counterclaim (2nd Contract)] -

the Architect should have granted EOT for SQA regarding the Works in Lot 3;

(ii) additional Works had been done by SQA [Variation Works (2nd Contract)]; and

(iii) SQA had suffered loss due to EOTs granted by the Architect as well as loss due to EOTs which should have been granted by the Architect [SQA’s Loss Due To EOT (2nd Contract)]. SQA had provided two bases for the computation of SQA’s Loss Due To EOT (2nd Contract).

The following five issues had been presented by LH, LY and SQA to the Arbitrator [5 Issues (Arbitration)] (paragraph 62 Award):

whether QS’s SFA (1st Contract) and QS’s SFA (2nd Contract) were deemed final and conclusive [1st Issue (Arbitration)];

whether SQA was entitled to claim for Variation Works (1st Contract) and Variation Works (2nd Contract) [2nd Issue) (Arbitration)];

whether SQA had caused the delays in the performance of the Works for which LH and LY were entitled to impose LD totaling RM5,496,850.00 from the expiry of the original Completion Dates of Lots 1, 2 and 3 (3 Lots) until the dates of issuance of CPC for the 3 Lots [3rd Issue (Arbitration)]. With regard to the 3rd Issue (Arbitration), whether SQA was entitled to an extension of time beyond EOTs granted by the Architect up to the date of attainment of the “Certificate of Completion and Compliance” (CCC) [Related Question to 3rd Issue (Arbitration)];

whether SQA was entitled to claim for SQA’s Loss Due To EOT (1st Contract) and SQA’s Loss Due To EOT (2nd Contract) [4th Issue (Arbitration)]; and

whether SQA had failed to rectify defects in the Works for which LH and LY could withhold the 2nd Moiety Sum for the 2 Contracts and rectification costs should be assessed in the Arbitration [5th Issue (Arbitration)].

The Arbitrator had answered the 5 Issues (Arbitration) as follows:

with regard to the 1st Issue (Arbitration) -

the Arbitrator decided that the QS’s valuations of the Variation Works (1st Contract) and Variation Works (2nd Contract) in QS’s SFA (1st Contract) and QS’s SFA (2nd Contract) respectively [QS’s Valuations (Variation Works)] were final and conclusive - paragraphs 78 and 79 Award; and

except for the QS’s Valuations (Variation Works), according to the Arbitrator, the other contents of QS’s SFA (1st Contract) and QS’s SFA (2nd Contract) could not be final and conclusive - paragraphs 63 to 77 and 89 to 99 Award;

in paragraphs 100 to 119 Award, the Arbitrator had held that SQA was not entitled to claim for Variation Works (1st Contract) and Variation Works (2nd Contract). Hence, the 2nd Issue (Arbitration) was resolved in favour of LH and LY;

in respect of the 3rd Issue (Arbitration) -

regarding the causes of delay in the Works, the Arbitrator preferred the opinion of SQA’s expert witness, Mr. Chung Sheaun Seen (Mr. Chung), to the view of the expert witness of LH and LY, Mr. John Wong Weng Long (Mr. Wong) - paragraphs 132 to 159 Award;

in paragraphs 160 to 163 and 216 Award, the Arbitrator determined that all EOTs granted by the Architect pursuant to the 2 Contracts were valid; and

the Arbitrator rejected the claim for LD by LH and LY - paragraph 164 Award;

regarding the Related Question to 3rd Issue (Arbitration) -

in paragraphs 165 to 207 and 232 Award, for Lot 1, the Arbitrator decided that SQA was entitled to a further extension of 143 days (beyond EOTs granted by the Architect) up to 2.2.2015 (date of CCC); and

with regard to Lot 3, the Arbitrator had determined that SQA was entitled to a further extension of 210 days (beyond EOTs granted by the Architect) up to 25.6.2015 (date of CCC) - paragraphs 208 to 232 Award;

in paragraphs 233 to 251 Award, the Arbitrator had resolved the 4th Issue (Arbitration) in SQA’s favour, namely, SQA was entitled to claim a total sum of RM762,893.28 from LH and LY for SQA’s Loss Due To EOT (1st Contract) and SQA’s Loss Due To EOT (2nd Contract) [collectively referred to in this judgment as “SQA’s Total Loss Due To EOTs”]; and

with regard to the 5th Issue (Arbitration) -

the Arbitrator had determined that -

there were defects regarding “Rooftop Ponding” for Lot 1 [Defects (Rooftop Ponding)] and SQA was liable for rectification cost of such defects in a sum of RM215,564.00 [Rectification Cost (Rooftop Ponding)] - paragraphs 252 to 307 and 326 to 329 Award; and

(ii) there were no defects regarding the “Basement Scupper Drains” - paragraphs 308 to 324 and 326 Award; and

subject to the deduction for Rectification Cost (Rooftop Ponding), SQA was entitled to the 2nd Moiety Sum for the 2 Contracts - paragraph 328 Award.

In summary, the Award was as follows, among others:

for the 1st Contract, after taking into account the “Final Account Value” by the QS, SQA’s Loss Due To EOT (1st Contract), LH’s previous payments to SQA, LH’s payment of the Adjudicated Amount (SQA-LH) to SQA and Rectification Cost (Rooftop Ponding), the Arbitrator decided that LH shall pay a sum of RM2,122,072.13 to SQA - paragraphs 329, 330 and 332 Award;

with regard to the 2nd Contract, after considering the “Final Account Value” by the QS, SQA’s Loss Due To EOT (2nd Contract), LY’s previous payments to SQA and LY’s payment of the Adjudicated Amount (SQA-LY) to SQA, the Arbitrator determined that LY shall pay an amount of RM157,646.72 to SQA - paragraphs 331 and 332 Award; and

LH and LY shall pay Costs (Arbitration) to SQA and if the Costs (Arbitration) could not be agreed upon by the parties, the Costs (Arbitration) shall be taxed on a “party to party” basis - paragraphs 334 to 337 and paragraph 3 of Part N Award [Sub-Paragraph N(3) Award]. C. 4 OS

SQA’s learned lead counsel had raised the following preliminary objection to OS No. 9 [SQA’s PO (OS No. 9)]:

s 42 AA had been repealed by Arbitration (Amendment) (No. 2) Act 2018 (Act A1569) with effect from 8.5.2018; and

OS No. 9 was filed on 6.9.2021 (after the enforcement of Act A1569). Accordingly, the court has no jurisdiction to hear OS No. 9 because s 42 AA has already been repealed by Act A1569 when OS No. 9 was filed.

In OS No. 9, learned counsel for LH and LY had objected to the admissibility of an affidavit affirmed on SQA’s behalf by Mr. Justin Hiep Dinh Vu on 18.11.2021 [Enc. 20 (OS No. 9)]. LH and LY objected to Enc. 20 (OS No. 9) [Objection (Enc. 20)] on the ground that the learned Deputy Registrar of the High Court had given directions for the filing and service of all affidavits for OS No. 9 on 12.10.2021 [DR’s Directions (OS No. 9)] and Enc. 20 (OS No. 9) had been filed and served contrary to DR’s Directions (OS No. 9). Furthermore, according to learned counsel for LH and LY, SQA had not obtained leave of court to file and serve Enc. 20 (OS No. 9).

I had proposed the following approach in the disposal of these 4 OS and all the parties had agreed to this approach:

the court will first decide Objection (Enc. 20);

SQA’s PO (OS No. 9) will then be determined;

if SQA’s PO (OS No. 9) is accepted, OS No. 9 shall be consequently dismissed. If the court however dismisses SQA’s PO (OS No. 9), the court will then decide the merits of OS No. 9;

irrespective of the outcome of OS No. 9, OS No. 10 will be determined on its merits. The resolution of OS No. 10 will affect the outcome of OS No. 8; and

lastly, the court will tax the Costs (Arbitration) in OS No. 14. D.

Issues The following questions arise in these 4 OS:

regarding SQA’s PO (OS No. 9) -

whether Act A1569 has retrospective effect and apply to this Arbitration which had commenced when SQA received the 2 Notices To Arbitrate (26.9.2017) as understood in s 23 AA;

did LH and LY have a “right” and/or “remedy” within the meaning of s 30(1)(b) and (d) of the Interpretation Acts 1948 and 1967 (IA)] when OS No. 9 was filed?; and

as a matter of stare decisis, whether the High Court is bound by a previous High Court’s judgment which has been affirmed by the Court of Appeal and Federal Court but there is no written judgment by the Court of Appeal and Federal Court in the earlier case;

if the court dismisses SQA’s PO (OS No. 9), in respect of the merits of OS No. 9 -

whether Question No. 5 (OS No. 9), Question No. 9 (OS No. 9) and Question No. 10 (OS No. 9) were -

factual issues; or

(ii) questions of mixed law and fact - to which s 42 AA had no application;

did Question No. 1 (OS No. 9) to Question No. 4 (OS No. 9), Question No. 8 (OS No. 9) and Question No. 10 (OS No. 9) arise out of the Award as required by s 42(1) AA?;

do the 10 Questions (OS No. 9) substantially affect the rights of LH and/or LY within the meaning of s 42(1A) AA?;

is OS No. 9 in reality an appeal to the High Court to set aside the Award under the guise of an application under s 42 AA (to refer to the High Court questions of law arising out of the

even if it is assumed that the 10 Questions (OS No. 9) are pure issues of law which arise out of the Award and substantially affect the rights of LH and/or LY, whether the court should exercise its discretion to grant any remedy to LH and/or LY under s 42(4)(b) to (d) AA;

in respect of OS No. 10 -

whether the Arbitrator had decided on any issue which had not been contemplated by or had not fallen within the terms of the submission to the Arbitration [Terms (Submission To Arbitration)] as understood in s 37(1)(a)(iv) AA;

did the Award contain any decision on a matter which was beyond the scope of the Terms (Submission To Arbitration) [within the meaning of s 37(1)(a)(v) AA]? The two questions in the above sub-paragraphs (a) and (b) entail a discussion regarding the distinction between an arbitral tribunal’s decision on an issue and the arbitral tribunal’s reasons and/or reasoning for the decision;

had the Arbitrator breached the second rule of natural justice (2nd Rule) as provided in s 37(1)(b)(ii), (2)(b)(i) and (ii) AA?;

whether the Arbitrator had breached the first rule of natural justice (1st Rule) under s 37(1)(b)(ii), (2)(b)(i) and (ii) AA; and

if there is a breach of the 1st and/or 2nd Rule by the Arbitrator, should the court exercise its discretion under s 37(1) AA to set aside the Award?;

with regard to OS No. 8 -

whether the court can exercise its discretion under s 41 of the Specific Relief Act 1950 (SRA) and O 15 r 16 of the Rules of Court 2012 (RC) to grant a declaration that SQA was entitled to the 2 Adjudicated Amounts, especially when -

CIPAA has no retrospective effect and cannot apply to the 2 Contracts as decided by Idrus Harun FCJ in the Federal Court case of Jack-In Pile (M) Sdn Bhd v Bauer (M) Sdn Bhd and another appeal [2020] 1 CLJ 299, at [4], [25], [45], [54], [55], [59] to [62] and [70] to [72]; and

(ii) the Court of Appeal’s Decisions (2 Adjudication Decisions) have set aside the High Court’s Decisions (2 Adjudication Decisions) and 2 Adjudication Decisions;

can the court order LH and LR to pay the 2 Adjudicated Amounts to SQA under s 38(1) AA?; and

in view of -

Jack-In Pile;

(ii) the Court of Appeal’s Decisions (2 Adjudication Decisions); and

(iii) the Arbitrator’s decision that the 2 Adjudicated Amounts should have been paid by LH and LY to SQA under the 2 Contracts [Arbitrator’s Decision (2 Adjudicated Amounts)] whether the court can recognize the Award pursuant to s 38(1) AA as binding and enforceable by entry as a judgment in terms of the Award to include the Arbitrator’s Decision (2 Adjudicated Amounts); and

in respect of OS No. 14 -

whether the Arbitrator could tax the Costs (Arbitration) after the filing of OS No. 8, OS No. 9 and OS No. 10;

was the Arbitrator functus officio after the delivery of the Award and could not thereafter tax the Costs (Arbitration)?;

in the interest of finality of disputes among parties and to save time, effort and costs of parties as well as the court, should the Arbitrator have exercised his discretion to tax the Costs (Arbitration) pursuant to s 44(1)(a)(ii) AA?;

whether SQA could file OS No. 14 after the filing of OS No. 8,

could the Arbitrator “delegate” his discretionary power to tax

whether part of the Award regarding taxation of Costs (Arbitration) was ambiguous and consequently, the High Court could not the tax the Costs (Arbitration);

whether SQA should have applied to the Arbitrator to tax the Costs (Arbitration) under s 35(1)(a) and (3) AA;

can the High Court’s Registrar (Registrar) tax the Costs (Arbitration) under O 59 r 12(1)(b) RC?; and

whether the High Court should tax the Costs (Arbitration) on -

a “standard” basis pursuant to O 59 r 16(2) and (3) RC;

(ii) an “indemnity” basis under O 59 r 16(2) and (4) RC; or

(iii) a “solicitor-client” basis according to O 59 r 17 RC. The issues stated in the above sub-paragraphs (4) and (5) are novel. E.

Objection (Enc. 20) I have no hesitation to dismiss Objection (Enc. 20) (without any order of costs) due to the following reasons:

LH and LY had applied in court enclosure no. 15 to amend OS No. 9. The court had allowed this application. Hence, on 27.1.2022 an amended OS No. 9 in court enclosure no. 18 (Amended OS No. 9) had been filed and served by LH and LY on SQA. Amended OS No. 9 was supported by an affidavit affirmed by Mr. Yow Thin Wah (Mr. Yow) on 27.1.2022 in court enclosure no. 19 [Enc. 19 (Amended OS No. 9)]. Enc. 20 (OS No. 9) was filed in reply to Enc. 19 (Amended OS No. 9). If I have upheld Objection (Enc. 20) and expunged Enc. 20 (OS No. 9) as evidence, there would be an injustice to SQA because the contents of Enc. 19 (Amended OS No. 9) would have been deemed to have been accepted by SQA because there was no affidavit from SQA to rebut Enc. 19 (Amended OS No. 9); and

LH and LY are estopped from raising Objection (Enc. 20) because LH and LY had already replied to Enc. 20 (OS No. 9) by way of an affidavit affirmed by Mr. Yow on 43.2022. Consequently, no injustice was occasioned to LH and LY when the court dismissed Objection (Enc. 20). F. Amended OS No. 9 F(1).

SQA’s PO (OS No. 9) I reproduce below ss 23, 42(1), (1A), (4) AA and s 30(1) IA: “s 23 AA Commencement of arbitral proceedings Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute shall commence on the date on which a request in writing for that dispute to be referred to arbitration is received by the respondent. s 42 AA Reference on questions of law

Any party may refer to the High Court any question of law arising out of an award.

The High Court shall dismiss a reference made under subsection (1) unless the question of law substantially affects the rights of one or more of the parties. …

The High Court may, on the determination of a reference -

confirm the award;

vary the award;

remit the award in whole or in part, together with the High Court’s determination on the question of law to the arbitral tribunal for reconsideration; or

set aside the award, in whole or in part. … s 30 IA Matters not affected by repeal.

The repeal of a written law in whole or in part shall not -

affect the previous operation of the repealed law or anything duly done or suffered thereunder; or

affect any right, privilege, obligation or liability acquired, accrued or incurred under the repealed law; or

affect any penalty, forfeiture or punishment incurred in respect of any offence committed under the repealed law; or

affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed, as if the repealing law had not been made.” (emphasis added).

SQA’s learned counsel has invited the court to accept SQA’s PO on the following grounds:

the words “Any party may refer to the High Court any question of law arising out of an award” in s 42(1) AA pre-supposed that the right to refer questions of law to the High Court under s 42(1) AA only accrues upon the delivery of the Award by the Arbitrator. As the Award was delivered on 30.7.2021 (after the repeal of s 42 AA by Act A1569 on 8.5.2018), the court has no jurisdiction to decide Amended OS No. 9;

reliance has been placed by SQA on the following four High Court judgments -

the decision of Nantha Balan J (as he then was) in AMDAC (M) Sdn Bhd v BYD Auto Industry Co Ltd [2020] 6 CLJ 625, at [107], [126], [139] to [149] and [153], as follows - “[107] The plain issue here is whether the repeal of s 42 [AA] is to apply prospectively or retrospectively. … … [126] Thus, the key question of law of fundamental importance here is - did Parliament repeal s 42 [AA] with the intention that it should only apply prospectively in respect of arbitrations which commenced after 8 May 2018 or was the repeal intended to apply "retrospectively" to all arbitrations which were still pending as at 8 May 2018? … [139] The first question is whether AMDAC only had an "abstract" right (per Hamilton 's case) or did they have an "accrued" right. [140] Based on the principles that may be culled from the case of Lim Phin Khian (per Gopal Sri Ram JCA) the right which AMDAC had vis-à-vis s 42 [AA] was a right which was vested in them at the time of institution of the original arbitration proceedings and not merely as a consequence of an adverse decision ie, the award. [141] Thus, I hold that contrary to the position that was articulated on behalf of BYD, AMDAC did not just have an "abstract" right. On the contrary, they had the right to challenge any award that was to be given by the arbitrator (albeit that it was inchoate and had yet to be formulated and published) and such a right existed from the commencement of the arbitration proceedings and not upon publication of the award. [142] The next point of importance is that based on the case of Colonial Sugar (supra per Lord Macnaghten) any legislation which causes the demise of a right of appeal is one which interferes with a substantive right. And based on the cases of Dixie and Lee Chow Meng (supra), clear statutory words are necessary if such substantive rights are to be repealed retrospectively. [143] Here, there are no words whatsoever in [Act A1569] to signify one way or the other whether the repeal is prospective or retrospective. Based on first principles, the rule is that since the amending legislation is silent, the demise of a substantive right is to be construed as taking effect prospectively and not retrospectively. [144] However, the enquiry does not end there, because having regard to the obvious consequence of construing the repeal of s 42 [AA] as having prospective effect, the court is enjoined to examine the legislative history, the explanatory statement to the 2018 Bill and (per Farlim) the content of the Parliamentary speech, if any which may shed light on the intention of Parliament. It is important to emphasise the principle that Parliament does not legislate in vain, and is deemed to be aware of the Macnaghten test. [145] Thus, it is imperative to take into consideration the explanatory statement which states that the amendment was to "promote arbitration as an alternative form of dispute resolution" and (per the Hansard dated 3 April 2018) that the legislative intent behind the amendment is to promote Malaysia's profile on the international and regional arena as a safe-seat and arbitration-friendly jurisdiction. [146] At the same time, it would be naive and artificial to ignore the reality that Federal Court's decision in Far East Holdings was the immediate catalyst for the repeal. Thus, it is quite clear that the legislative intention was to do away with challenges to arbitral awards under s 42 [AA] and it would be horrendous to think that the amendment was done whilst allowing awards that are made under pending arbitrations (which commenced prior to 8 May 2018) to take the s 42 route. Such an eventuality would defeat the very purpose for which the repeal was undertaken, which is to insulate arbitral awards from wide ranging challenges (per Far East Holdings) pursuant to s 42 [AA]. [147] As such, the view that I take is that although [Act A15669] does not state anything about the repeal having retrospective effect, looking at all the circumstances, there is room for implying (out of necessity per Lim Phin Khian's case) an intention on the part of Parliament that the repeal of s 42 [AA] was indeed to have retrospective effect. [148] As stated earlier, the Macnaghten test may in certain circumstances be displaced by necessary implication as it was the intention of Parliament that awards are to be final ("muktamad'") and are not to be re-opened via the "widened" judicial door of error of law. [149] Were it otherwise, then there will be a multitude of awards in pending arbitrations which will keep coming to the High Court through the s 42 route and this process will go on for several years (probably decades) until all the pre-8 May 2018 arbitrations have run their course and it will be several years later before the proverbial "s 42 door" is "shut". That would lead to a rather invidious and uncertain situation which is not what was intended by Parliament. … [153] In my view, upon examining all the circumstances holistically, the true (and only possible) intention of Parliament by repealing s 42 was for the repeal to apply retrospectively and to close the door to a s 42 challenge with effect from 8 May 2018 in respect of any award that is published on or after 8 May 2018. The award here falls in that category. In the result, AMDAC's complaints pursuant to s 42 are accordingly dismissed in limine. …” (emphasis added);

Darryl Goon Siew Chye J (as he then was) has decided as follows in

(M) Bhd v Hi-Poly Industries Sdn Bhd [2020] MLJU 1446, at [51], [53], [54] and [62] to [71] - “[51] Section 42 was concerned with references to the High Court of questions of law arising out of awards. It did not deal with arbitration agreements themselves or arbitration proceedings from which an award may give rise to questions of law to be referred. Therefore, the question whether an arbitration that was commenced prior to the repeal of section 42 would be affected by its repeal does not arise. … [53] In light of the foregoing, I respectfully agree with the submissions made on behalf of the Plaintiff that the repeal of section 42 [AA] was not retrospective or intended to be. ... [54] As the repeal was not retrospective, section 30(1)(b) [IA] would apply and the issue is whether the right to invoke section 42 was acquired by the Plaintiff, or accrued to its benefit, at the commencement of the arbitration, before the repeal of section 42 was brought into force. … [62] Unlike section 42, the right of appeal in an action in a Court of law is not limited to only questions of law and is much wider. [63] Section 42 was a right created by statute. A reference under section 42 was, jurisprudentially, a reference and not to be conflated and treated as synonymous with an appeal in Court proceedings. [64] As a right created by statute, section 42 should primarily be considered and construed within the ambit of the statute within which it is provided and not to be taken out of its context and, merely by analogy, equated with a right of appeal, in a different context and in a different legislation. [65] There are numerous legislation with provisions that confer rights in various forms. However, it would obviously be untenable to contend that these rights vest regardless of whether the terms in which they are conferred have been met. [66] Similarly, it would be untenable to suggest that the right to refer to the High Court any question of law arising out of an award, vests even before any award has come into existence; a rationale articulated by Edgar Joseph JR FCJ in Lim Phin Khian. [67] While section 42 may have been available at the commencement of an arbitration yet, it can only be invoked, and thus the right to invoke it, can only vests when an award is made and not before. [68] It was only after the repeal of section 42 had come into force that the Ruling by the learned Arbitrator was made but, by then, the right to refer any question of law thereunder no longer existed. [69] Effective prospectively, the repeal of section 42 meant that it could no longer be invoked in respect of awards made after the repeal had come into force. [70] Accordingly, the Plaintiff was not entitled to invoke the repealed section 42 [AA] in respect of the Ruling. [71] In AMDAC (M) Sdn Bhd v BYD Auto Industry Company Ltd [2020] 6 CLJ 625, S Nantha Balan J (as his Lordship then was) came to the conclusion, after examining the circumstances of the repeal of section 42 holistically, that the intention of Parliament was to close the door to section 42 after 8th May 2018. Thus, section 42 was not be available to all arbitration awards made after that date. Although perhaps by a different route, the same conclusion was arrived at.” (emphasis added);

the following judgment of Aliza Sulaiman J in Pembinaan Limbongan Setia Sdn Bhd v Josu Engineering & Construction Sdn Bhd [2020] MLJU 192, at [42(b)(iv)] - “[42] Having carefully considered the averments in the related Affidavits and the written submissions filed as well as the oral submissions by learned counsels representing the parties, my findings are as follows: …

(b)(iv) Applicability of section 42 [AA] … Applying the above mentioned legal principles as established by high authority, I have no difficulty at all in arriving at the same conclusion as propounded by the Plaintiff that section 42 [AA] would affect substantive rights if applied retrospectively. The provision clearly involves the reference to the High Court of any question of law arising out of any award and surely, if the Court is minded to answer the question(s) referred to it, the Court would inevitably make a determination on serious and important issues or matters which would have a bearing on the substantive rights of the parties in the arbitration. This is borne out by subsection 42(4) [AA] where the Court is given powers to either confirm, vary, remit or set aside the award. Further, where the award is varied by the Court, the variation shall have effect as part of the arbitral tribunal’s award [subsection 42(5)] and where it is remitted in whole or in part to the arbitral tribunal for reconsideration, the arbitral tribunal shall make a fresh award [subsection 42(6)]. To advocate that section 42 concerns merely procedural matters or does not affect substantive rights if applied retrospectively, is with due respect, quite preposterous. In the premises, I conclude that the repeal of section 42 [AA] has prospective, rather than a retrospective, effect. Moreover, pursuant to P.U.(B) 265/2018 dated 5.5.2018, Act A1569 came into operation on 8.5.2018 i.e. after the filing of the Plaintiff’s OS on 22.12.2017, which is well within the time frame of 42 days of the publication and receipt of the said Award as provided in subsection 42(2) [AA].” (emphasis added); and

in Johawaki Development Sdn Bhd v Majlis Agama Islam Wilayah Persekutuan and another case [2020] MLJU 660, at [166], Aliza Sulaiman J has decided as follows - “[166] It is an uncontroverted fact that the Award was finally published on 14.12.2018. As submitted by Johawaki, when s 42 AA 2005 was repealed, there was no Award upon which s 42 could apply. Therefore, I am inclined to agree with Johawaki’s contention that MAIWP’s reliance on s 42 AA 2005 is misconceived.” (emphasis added); and

the High Court’s decision in AMDAC has been affirmed on appeal to the Court of Appeal. Hence, according to SQA’s learned counsel, this court is bound by the Court of Appeal’s decision in AMDAC.

In Mammoth Empire Construction Sdn Bhd v Kenwise Sdn Bhd [2020] MLJU 1473, at [15], I have the misfortune to depart from AMDAC as follows: “[15] With respect, I am unable to follow AMDAC. Diffidently, I am of the view that Act A1569 cannot apply to this Arbitration and Mammoth’s Reference OS. My reasons are as follows:

(1)

Firstly, when I decided Mammoth Empire Construction, my attention was not drawn to -

the fact that the Court of Appeal has affirmed the High Court’s judgment in AMDAC. There is however no written judgment of the Court of Appeal in AMDAC; and

the judgments in Tokio Marine Insurans, Pembinaan Limbongan Setia and Johawaki Development.

I will now reconsider my earlier decision in

Construction in the light of the matters stated in the above paragraph The appeal to the Court of Appeal against my decision in Mammoth Empire Construction has been withdrawn after the delivery of my written judgment.

Firstly, I am of the following view regarding the stare decisis doctrine:

it is the ratio decidendi in the written judgment of a superior court [Ratio Decidendi (Higher Court)] and not the decision of the superior court itself which binds all lower courts. I use the term “superior court” to refer to the Federal Court, Court of Appeal and High Court. I have decided as follows in Syahin Hafiy Danial Bin Soh Ahmad Luptepi Amin v Mansur Bin Yunus & Anor [2021] 8 MLJ 297, at [14] and [15] - “[14] I am not able to accept the reference by the Defendant’s learned counsel to Other Cases except if written judgments have been delivered in the Other Cases. This is because from the view point of the stare decisis doctrine, only the ratio decidendi ascertained from a written judgment of a superior court, has binding or persuasive effect. I refer to the judgment of Raja Azlan Shah FJ (as his Majesty then was) in the Federal Court case of Malaysia National Insurance Sdn Bhd v Abdul Aziz bin Mohamed Daud [1979] 2 MLJ 29, at 32 as follows - “However, I would once again emphasize what has so often been said before, that precedents are not to be slavishly followed; a case may be followed only for its strict ratio decidendi.” (emphasis added). Without a written judgment of a previous case, the court cannot ascertain the ratio decidendi of the previous case by considering the following three matters (3 Matters) -

the material facts of the case which give rise to the issue to be decided by the court;

the rule of law which has been applied by the court to resolve the issue; and

the reasoning of the court in applying the rule of law to decide the issue in question. [15] In Datuk Haji Harun bin Haji Idris v Public Prosecutor [1977] 2 MLJ 155, the appellant’s learned counsel referred to a digest, summary or extract of a previous decision, Heah Chin Kim. Suffian LP held as follows in the Federal Court in Datuk Haji Harun, at p. 170 - “The full judgment in Heah Chin Kim [1954] MLJ xxxiii is not available and it is impossible for us to determine its ratio decidendi.” (emphasis added). Based on Datuk Haji Harun, no reliance can be placed on a digest, summary or extract of a previous decision because the court cannot extract the ratio decidendi of the previous case by considering the 3 Matters.” (emphasis added). As explained in Syahin, since the Court of Appeal has not delivered a written judgment in AMDAC, there is therefore no ratio decidendi of the Court of Appeal’s decision in AMDAC which binds all High Courts;

when a written judgment of a lower court has been reversed or overruled by a higher court, the ratio decidendi of the lower court [Ratio Decidendi (Lower Court)] cannot be cited as an authority unless the Ratio Decidendi (Lower Court) has been subsequently restored or accepted by the Ratio Decidendi (Superior Court);

if a lower court’s decision is reversed by a higher court, the Ratio Decidendi (Lower Court) cannot have binding effect even though there is no written judgment of the higher court. The Ratio Decidendi (Lower Court) can only be cited as an authority if the Ratio Decidendi (Superior Court) subsequently restores or accepts the Ratio Decidendi (Lower Court); and

a High Court judge or Judicial Commissioner (J/JC) is not bound by the ratio decidendi of a written judgment delivered by another J/JC - please refer to the judgment of Ong Hock Thye FJ (as he then was) in the Federal Court case of Sundralingam v Ramanathan Chettiar [1967] 2 MLJ 211, at 213.

In view of Tokio Marine Insurans, Pembinaan Limbongan Setia and Johawaki Development, I have reconsidered Mammoth Empire Construction. With respect, I maintain my opinion in Mammoth Empire Construction. My reasons are as follows:

AMDAC, Tokio Marine Insurans, Pembinaan Limbongan Setia and Johawaki Development did not consider the effect of s 23 AA. By virtue of ss 23 and 42 AA read with s 30(1)(b) and (d) IA, when SQA received the 2 Notices To Arbitrate (26.9.2017), LH and LY already had a vested “right” and/or “remedy” under s 42 AA to refer questions of law to the High Court which might subsequently arise from the Award [Vested Right/Remedy (Receipt of Notice to Arbitrate)];

if I have followed AMDAC, Tokio Marine Insurans, Pembinaan Limbongan Setia and Johawaki Development, this is not only contrary to s 23 AA read with s 30(1)(b) and (d) IA but will also render redundant the Vested Right/Remedy (Receipt of Notice to Arbitrate). Furthermore, the effect of AMDAC, Tokio Marine Insurans, Pembinaan Limbongan Setia and Johawaki Development is to confer retrospective effect on Act A1569, namely, Act A1569 applies to all arbitral proceedings which have been commenced before 8.5.2018 and the awards have yet to be delivered on 8.5.2018;

as explained in Mammoth Empire Construction, if the legislature had intended for the repeal of s 42 AA in Act A1569 to apply retroactively to all arbitrations which had been commenced before 8.5.2018 but the awards had not been delivered on 8.5.2018, the legislature could have easily stated as such in Act A1569. Parliament however did not provide as such in Act A1569; and

the wording in s 42(1) AA (Any party may refer to the High Court any question of law arising out of an award”) merely concerns when a party may refer to the High Court questions of law which arises out of an award. The words in s 42(1) AA cannot support a statutory interpretation that Parliament has intended for Act A1569 to apply retrospectively to all arbitral proceedings which had been commenced before 8.5.2018 but the awards had not been delivered on 8.5.2021.

Premised on the reasons expressed in the above paragraph 23, I am constrained to dismiss SQA’s PO (OS No. 9) with costs. F(2). 10 Questions (OS No. 9)

The 10 Questions (OS No. 9) posed in Amended OS No. 9 are as follows:

whether on the correct interpretation of Clause 23 [COC], the duty/responsibility to apply for EOT lies on SQA only [Question No. 1 (OS No. 9)];

whether on the correct interpretation of Clause 23.1 [COC], the conditions precedent of giving notice for application of EOT must be fulfilled [Question No. 2 (OS No. 9)];

whether on the correct interpretation of Clause 23.1 [COC], the failure of SQA to give notice for application of EOT within the timeframe stipulated under Clause 23.1 [COC] did not entitle SQA for any EOT [Question No. 3 (OS No. 9)];

whether the Arbitrator is bound by the principles under the decidedprecedents with regard to the same issue [Question No. 4 (OS No. 9)];

whether the Arbitrator has applied the correct principles and law in assessing SQA’s application for extension of time [Question No. 5 (OS No. 9)];

whether on the correct interpretation of Clause 24.1 [COC], the condition precedent to give notice for direct loss and/or expense claim must be fulfilled by SQA [Question No. 6 (OS No. 9)];

whether on the correct interpretation of Clause 24.1 [COC], the failure of SQA to give notice for direct loss and/or expense claim in accordance with the condition precedent under Clause 24.1 [COC] did not entitle SQA for any direct loss and/or expense claim [Question No. 7 (OS No. 9)];

whether on the correct interpretation of Clause 30.10(a) and Clause 30.10(b) [COC], the dispute or disagreement to the [QS’s SFA (1st Contract) and QS’s SFA (2nd Contract)] must be by way of arbitration proceedings within the stipulated timeframe [Question No. 8 (OS No. 9)];

whether under the requirements of law, SQA is responsible for thedefect works in respect of scupper drain [Question No. 9 (OS No. 9)]; and

whether the Arbitrator has erred when he decided in a manner contradicting his own findings in the [Award] [Question No. 10 (OS No. 9)]; F(3).

Application of s 42 AA In Zenbay Sdn Bhd v Yong Choo Kui Shipyard Sdn Bhd [2015] 10 CLJ 924, at [46], I have explained that the application of s 42 AA involves the following three stages: “[46] Thirdly, an application of s 42 AA concerns the following 3 matters:

whether a plaintiff has fulfilled certain threshold requirements under s 42 AA read with Order 69 rules 2, 4 and 6 RC so as to confer jurisdiction on the court to determine the question of law referred to it. I will describe this preliminary stage as a “Threshold Stage”;

if the Threshold Stage is resolved in favour of a plaintiff, the court may proceed to answer the question(s) of law referred to it. The court’s determination of question(s) of law referred to it, will be described in this judgment as the “Determination Stage”; and

if the question(s) of law is (are) determined against a plaintiff, the OS will consequently be dismissed. If however the court answers the question(s) of law in favour of a plaintiff, the court nevertheless retains a discretion not to grant any relief as provided in s 42(4)(a) to (b) AA. I will refer to this final stage as the “Relief Stage”.” (emphasis added). F(4). Did Enc. 9 fulfil threshold requirements?

For the court to have jurisdiction to decide OS No. 9 under s 42 AA, LH and LY have to fulfill all the following threshold requirements:

s 42(1) AA mandatorily requires OS No. 9 to raise questions of law and not factual issues. In the Federal Court case of Far East Holdings Bhd & Anor v Majlis Ugama Islam dan Resam Pahang and other appeals [2018] 1 MLJ 1, at [117], [153] and [154], Jeffrey Tan FCJ has decided as follows - “Test under s 42 [117] Under s 42(1) any party may refer to the High Court ‘any question of law arising out of an award’. And under s 42A(1), ‘The High Court shall dismiss a reference made under sub-s (1) unless the question of law substantially affects the rights of one or more of the parties’. The question of law must not only arise out of the award, but must substantially affect the rights of one or more of the parties. Short of one and the reference shall be dismissed. … Question of fact [153] Where it is a question of fact, ‘The arbitrators (remain) the masters of the facts. On an appeal the court must decide any questions of law arising from the award on the basis of full and unqualified acceptance of the findings of fact of the arbitrators. It is irrelevant whether the court considers these findings to be right or wrong. It also does not matter how obvious a mistake by the arbitrators on issues of fact might be or what the scale of the financial correspondences of the mistake of fact might be. That is, of course, an unsurprising position. After all, the very reason why parties conclude an arbitration agreement is because they do not wish to litigate in the courts. Parties who submit their disputes to arbitration bind themselves by agreement to honour the arbitrators’ award on the facts. The principle of party autonomy decrees that a court ought never to question the arbitrators’ findings of fact’ (The ‘Baleares’ at p 228). ‘… on findings of facts an arbitrator is the sole judge. Further, whether he drew the wrong inferences of facts from the evidence itself is not sufficient as a ground to warrant setting aside his award (see GKN Centrax Gears Ltd v Matbro Ltd [1976] 2 Lloyd’s Rep 555)’ (Future Heritage Sdn Bhd v Intelek Timur Sdn Bhd [2003] 1 MLJ 49 per Richard Malunjum JCA, as he then was). ‘… if an arbitrator had erred by drawing wrong inferences of fact from the evidence before him, be it oral or documentary, that in itself is not sufficient to warrant setting aside of his award. It would be contrary to all the established legal principles relating to arbitration if an award based upon the evidence presented were liable to be reopened on the suggestion that some of the evidence had been ‘misapprehended and misunderstood’ per Raja Azlan Shah J (as he then was) in Sharikat Pemborong Pertanian & Perumahan v Federal Land Development Authority [1971] 2 MLJ 210’ (Intelek Timur Sdn Bhd v Future Heritage Sdn Bhd [2004] 1 MLJ 401 per Siti Norma Yaakob FCJ, as she then was, delivering the judgment of the court). [154] ‘It is essential therefore to understand the basic difference between appeals in the court system from subordinate courts, where issues of ‘weight of evidence’ are routinely addressed, and references under s 42 [AA], where the court has no jurisdiction to entertain arguments based on weight of evidence … ‘the parties will not be allowed to circumvent the rule that the tribunal’s findings of fact are conclusive by alleging that they are inconsistent or they constitute a serious irregularity or an excess of jurisdiction, or on the basis that there was insufficient evidence to support the findings in question. The argument that it is a question of law whether there is material to support a finding of fact is no longer available’ (Russell on Arbitration

at pp 8-057)’ (The Arbitration Act 2005 at pp 198-199).” (emphasis added). Tengku Maimon JCA (as she then was) has decided in the Court of Appeal case of Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd v Sunway City Sdn Bhd [2019] 2 MLJ 495, at [43], that a question of mixed law and fixed cannot be referred to the High Court under s 42 AA. Hence, only pure questions of law can be referred to the High Court pursuant to s 42 AA;

according to s 42(1) AA, the pure question of law must arise out of the award itself and not from the arbitral proceedings - please refer to Mohamad Ariff Yusoff JCA’s judgment in the Court of Appeal in Kerajaan Malaysia v Perwira Bintang Holdings Sdn Bhd [2015] 1 CLJ 617, at 637. In other words, if the pure legal question does not appear on the face of the award, the court has no jurisdiction to decide the legal issue under s 42(1) AA even though the legal question may have been raised in -

a claimant’s statement of claim (points of claim), claimant’s reply to respondent’s defence (points of defence) and claimant’s defence to respondent’s counterclaim;

respondent’s defence, respondent’s counterclaim and respondent’s rejoinder (if allowed by arbitral tribunal);

witness statements and documents adduced in arbitral proceedings;

notes of evidence taken in arbitral proceedings; and

written submissions filed by parties in the arbitration; and

it is a mandatory requirement of s 42(1A) AA that the pure question of law should “substantially affects the rights of one or more of the parties” in the arbitration. The meaning of this threshold requirement has been explained by Mary Lim J in MMC Engineering Group Bhd & Anor v Wayss & Freytag (M) Sdn Bhd [2015] 10 MLJ 689, at [37] to [39], as follows - “[37] Although the court’s powers under s 42 is discretionary, this discretion is curtailed when one of the conditions for intervention of the court is not fulfilled, and that is where the plaintiffs are unable to show how the question of law substantially affects the rights of one or more of the parties as mandated by sub-s 42(1A). The term ‘parties’ here must necessarily and logically refer to or include the plaintiffs; otherwise it makes no practical sense for the plaintiffs to seek the intervention of the court. ... [38] Again, there is no definition on this requirement. There is however, some indication of what the term may include in the decision of Hong Huat Development Co (Pte) Ltd v Hiap Hong & Co Pte Ltd [2000] 2 SLR 609. In that case, the Singapore Court of Appeal accepted the interpretation of the expression ‘substantially affect the rights’ by Lord Denning in the Court of Appeal in ‘the Nema’ [1980] QB 547, at p 564; that it refers to ‘a point of practical importance - not an academic point - nor a minor point’. [39] This decision was followed in Northern Elevator Manufacturing Sdn Bhd v United Engineers (Singapore) Pte Ltd where the Court of Appeal recognised that ‘… the question as to how ‘substantially’ was to be measured, remained. Whether a claim was substantial or not can sometimes be considered in absolute terms. We could arbitrarily say that $10 is insubstantial. There will come a point where one might not be able to declare confidently that the given sum is substantial or otherwise, without considering the context of the claim … In The Evimera [1982] 1 Lloyd’s Rep 55 , the court was of the view that the claim for $20,000 was not substantial in the context of that case … We agree with the court in The Evimera that the granting of leave is a discretionary exercise and as such, is not governed by rules, provided that the statutory criteria are satisfied … The question of substantiality is largely a matter of discretion at case’. I am of the view that this is interpretation holds equally true for s 42 which has the same requirement. I am also of the view that there must be evidence presented or at the very least a claim or an assertion in the cause papers including the affidavits filed in support to the effect that the applicant’s rights have been affected substantially by the arbitration award; and an explanation as to how those rights are affected substantially.” (emphasis added). F(4A). Whether Question No. 5 (OS No. 9), Question No. 9 (OS No. 9) and Question No. 10 (OS No. 9) are pure legal issues

Firstly, Question No. 10 (OS No. 9) is a factual issue (whether there are contradictions in the Arbitrator’s findings in the Award) which cannot be referred to the High Court under s 42(1) AA.

Secondly, Question No. 5 (OS No. 9) is an issue of mixed law and fact because whether the Arbitrator had applied the correct legal principles in deciding the validity of SQA’a EOT applications, must depend on the evidence adduced by SQA, LH and LY with regard to SQA’s EOT applications. Similarly, Question No. 9 (OS No. 9) is also an issue of mixed law and fact. This is because whether SQA was responsible for the rectification works under the 2 Contracts would depend on the nature of the defects in the Works and the causes of such defects. Premised on Syarikat Pembenaan Yeoh Tiong Lay, Question No. 5 (OS No. 9) and Question No. 9 (OS No. 9) are not pure legal issues. As such, the court has no jurisdiction to decide Question No. 5 (OS No. 9) and Question No. 9 (OS No. 9) pursuant to s 42(1) AA. F(4B). Did Question No. 1 (OS No. 9) to Question No. 4 (OS No. 9), Question No. 8 (OS No. 9) and Question No. 10 (OS No. 9) arise from Award?

Question No. 1 (OS No. 9) to Question No. 4 (OS No. 9), Question No. 8 (OS No. 9) and Question No. 10 (OS No. 9) did not arise from the Award. On this ground alone, the court cannot decide these questions under s 42(1) AA. F(4C). Whether Question No. 1 (OS No. 9) to Question No. 8 (OS No. 9) substantially affect rights of LH and LY

Question No. 1 (OS No. 9) to Question No. 3 (OS No. 9) concern clause 23 COC. According to learned counsel for LH and LY, SQA did not comply with the conditions precedent stipulated in clause 23 COC for SQA to make EOT applications. Consequently, SQA was not entitled to any EOT under the 2 Contracts. I am unable to see how Question No. 1 (OS No. 9) to Question No. 3 (OS No. 9) substantially affect the rights of LH and LY in the Arbitration because -

clause 34.8(e) COC has expressly conferred power on the Arbitrator “to determine all matters in dispute submitted to [the Arbitrator] in the same manner as if no such … requirement or notice has been given”; and

the commercial purpose of clauses 23.1, 23.2 and 23.3 COC was for SQA to give sufficient particulars of SQA’s EOT applications and sufficient time for the Architect to decide SQA’s EOT applications on their merits. The Architect in this case did consider SQA’s EOT applications on their merits and did not dismiss SQA’s EOT applications merely on the ground that SQA had failed to comply with clause 23 COC. In other words, any non-compliance with clause 23 COC by SQA was immaterial to the Architect.

I am of the view that LH and LY cannot contend that Question No. 4 (OS No. 9) and Question No. 5 (OS No. 9) substantially affect the rights of LH and LY in the Arbitration because the Arbitrator had already given cogent reasons in deciding the 3rd Issue (Arbitration) and Related Question to 3rd Issue (Arbitration) regarding SQA’s EOT applications.

Question No. 6 (OS No. 9) and Question No. 7 (OS No. 9) concern the application of clause 24.1 COC. It has been submitted by learned counsel for LH and LY that SQA did not comply with clause 24.1 COC in claiming for SQA’s Total Loss Due To EOTs. I cannot accept this contention because notwithstanding SQA’s failure to give any notice to the Architect pursuant to clause 24.1 COC, clause 34.8(e) COC empowers the Arbitrator to decide on SQA’s Total Loss Due To EOTs.

By way of Question No. 8 (OS No. 9), learned counsel for LH and LY has contended that SQA could only dispute the contents of the Architect’s “Final Account” by compliance with the requirements laid down in clauses 30.10(a) and 30.10(b) COC. Premised on clause 34.8(e) COC, I have no hesitation to decide that Question No. 8 (OS No. 9) does not substantially affect the rights of LH and LY in the Arbitration. F(4D). Was Amended OS No. 9 an appeal against Award?

In view of the reasons stated in the above Parts F(4A) to F(4C), Amended OS No. 9 has failed to fulfil the threshold requirements as stipulated in s 42(1) and (1A) AA. Accordingly, I am constrained to dismiss Amended OS No. 9 without answering the 10 Questions (OS No. 9) (Determination Stage) - please refer to Zenbay. I also accept the submission by SQA’s learned counsel that in reality, Amended OS No. 9 is actually an appeal by LH and LY to the High Court to set aside the Award under the guise of an application under s 42 AA. F(5). How should court answer 10 Questions (OS No. 9)?

I shall now assume that Amended OS No. 9 has complied with all the threshold requirements. Consequently, this court shall now proceed to the Determination Stage. I have no hesitation to decide the Determination Stage in favour of SQA against LH and LY as follows:

with regard to Question No. 1 (OS No. 9) to Question No. 3 (OS No. 9), in view of clause 34.8(e) COC and the commercial objective of clause 23, any non-compliance with clause 23 COC by SQA in this case is immaterial. This court thereby declines to answer Question No. 1 (OS No. 9) to Question No. 3 (OS No. 9);

the answer to Question No. 4 (OS No. 9) must be positive because the Arbitrator is bound by previous cases which have the same or similar contractual provisions as the 2 Contracts. Having said that, as explained in the above paragraph 32, the answer to Question No. 5 (OS No. 9) must be “yes”;

Question No. 6 (OS No. 9) to Question No. 8 (OS No. 9) are irrelevant in the Arbitration due to the application of clause 34.8(e) COC - please refer to the above paragraphs 33 and 34. There is therefore no necessity to answer Question No. 6 (OS No. 9) to Question No. 8 (OS No. 9);

as explained in the above paragraph 28, Question No. 10 (OS No. 9) is a factual issue and the Arbitrator was the “master of facts” - please refer to Far East Holdings. It is thus beyond the court’s jurisdiction under s 42(1) AA to answer Question No. 10 (OS No. 9); and

Question No. 5 (OS No. 9) and Question No. 9 (OS No. 9) are issues of mixed law and fact which should not be answered by this court - please refer to the above paragraph 29. F(6). Should court grant relief in Amended OS (No. 9)?

Even if it is assumed that the 10 Questions (OS No. 9) are pure questions of law which arise out of the Award and substantially affect the rights of LH and/or LY in the Arbitration, I am not inclined to exercise my discretion to grant any remedy to LH and/or LY under s 42(4)(b) to (d) AA because I am not persuaded that any injustice has been caused to LH and/or LY in the Arbitration.

F(7). Court’s decision on Amended OS No. 9 Due to the reasons elaborated in the above Parts F(3) to F(6), I am constrained to dismiss Amended OS No. 9.

OS No. 10 I reproduce below the relevant parts of ss 8, 20, 21, 36 and 37 AA: “s 8 Extent of court intervention No court shall intervene in any of the matters governed by this Act, except where so provided in this Act. s 20 Equal treatment of parties The parties shall be treated with equality and each party shall be given a fair and reasonable opportunity of presenting that party’s case. s 21 Determination of rules of procedure

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.

Where the parties fail to agree under subsection (1), the arbitral tribunal may, subject to the provisions of this Act, conduct the arbitration in such manner as it considers appropriate.

The power conferred upon the arbitral tribunal under subsection (2) shall include the power to - …

draw on its own knowledge and expertise; …

make such other orders as the arbitral tribunal considers appropriate. s 36 An award is final and binding

An award made by an arbitral tribunal pursuant to an arbitration agreement shall be final and binding on the parties and may be relied upon by any party by way of defence, set-off or otherwise in any proceedings in any court. Application for setting aside s 37(1) An award may be set aside by the High Court only if -

the party making the application provides proof that - …

(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

the High Court finds that -

…; or

(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 -

…; or

a breach of the rules of natural justice occurred -

during the arbitral proceedings; or

(ii) in connection with the making of the award.” (emphasis added).

Learned counsel for LH and LY has submitted that the Arbitrator had “breached the rules of natural justice by acting in excess of his jurisdiction” when the Arbitrator decided as follows in the Award:

according to the Arbitrator in paragraphs 151 to 152 Award, the concept of “three part chain of causation” was only a formalization of the Architect’s thought process in the Architect’s assessment of SQA’s EOT applications; and

in paragraphs 321 to 322 Award, the Arbitrator had “imposed additional and unnecessary obligation which is not found in [PAM Contract 2006]”.

With respect to learned counsel for LH and LY, the following three grounds are separate grounds for the court to exercise its discretion to set aside an arbitral award -

when an arbitral tribunal had decided on an issue which had not been contemplated by or had not fallen within the Terms (Submission To Arbitration) as understood in s 37(1)(a)(iv) AA;

when an arbitral award contained any decision on a matter which was beyond the scope of the Terms (Submission To Arbitration) within the meaning of s 37(1)(a)(v) AA; and

whether an arbitral tribunal had breached the 1st Rule and/or 2nd Rule as stipulated in s 37(1)(b)(ii), (2)(b)(i) and (ii) AA.

Learned counsel for LH and LY should not have conflated the three separate grounds to set aside an arbitral award as stated in the above paragraph 41.

G(1). Whether LH and LY can rely on s 37(1)(a)(iv) and (v) AA Firstly, paragraphs 151 to 152 Award regarding the “three part chain of causation” constituted part of the Arbitrator’s reason and/or reasoning for the Arbitrator’s decision on the 3rd Issue (Arbitration) [Arbitrator’s Reason/Reasoning (3rd Issue)]. Those paragraphs in the Award were not the Arbitrator’s decision for the 3rd Issue (Arbitration).

Secondly, paragraphs 321 to 322 Award concerned part of the reason and/or reasoning of the Arbitrator when the Arbitrator decided the 5th Issue (Arbitration) [Arbitrator’s Reason/Reasoning (5th Issue)]. Once again, the Arbitrator’s Reason/Reasoning (5th Issue) is to be distinguished from the Arbitrator’s determination of the 5th Issue (Arbitration).

The 3rd Issue (Arbitration) clearly arose from the Terms (Submission To Arbitration), namely -

LY’s Re-Amended Points of Claim pursuant to the 1st Contract (RPOC);

SQA’s Amended Points of Defence and Counterclaim regarding the 1st Contract (APDCC);

LY’s RPOC for the 2nd Contract; and

SQA’s APDCC in respect of for the 2nd Contract.

The 5th Issue (Arbitration) fell within from the Terms (Submission To Arbitration), ie., the documents stated in the above paragraph 45.

I am of the view that s 37(1)(a)(iv) and/or (v) AA can only be invoked if an arbitral tribunal has decided on an issue or matter which is beyond the Terms (Submission To Arbitration). So long as an arbitral tribunal has decided on an issue or matter which is within the Terms (Submission To Arbitration), the arbitral tribunal may give any reason and/or reasoning for the decision as the arbitral tribunal deems just and appropriate, including any reason and/or reasoning which may be beyond the Terms (Submission To Arbitration).

As the Arbitrator had not decided on a question or matter which had not been contemplated by or had not fallen within the Terms (Submission To Arbitration), LH and LY cannot rely on s 37(1)(a)(iv) and (v) AA to support OS No. 10. As explained in the above paragraph 47, the Arbitrator’s Reason/Reasoning (3rd Issue) and Arbitrator’s Reason/Reasoning (5th Issue) are not relevant to the question of whether the Arbitrator had decided on an issue or matter which was beyond the Terms (Submission To Arbitration).

G(2). Two rules of natural justice (2 Rules) I have decided as follows in Ragawang Corporation Sdn Bhd v One Amerin Residence Sdn Bhd and 3 other cases [2022] MLJU 2121, at [30] and [31]: “[30] As explained by Lord Denning in delivering the judgment of the Privy Council in an appeal from the Federation of Malaya, B Surinder Singh Kanda v Government of the Federation of Malaya [1962] MLJ 169, at 172, there are two rules of natural justice (2 Rules), namely:

the 1st Rule, ie., the rule against bias; and

the 2nd Rule which embodies the right to be heard. [31] I am of the following view regarding the application of the 2 Rules and s 20 AA:

s 20 AA imposes the following two duties on arbitrators [2 Duties (Section 20 AA)] -

an arbitrator “shall” treat all parties equally [1st Duty (Section 20 AA)]; and

each party “shall” be given by an arbitrator a fair and reasonable opportunity of presenting that party’s case [2nd

the 1st Duty (Section 20 AA) falls within the 1st Rule. The 1st Rule is wider than the 1st Duty (Section 20 AA). This is because even if an arbitrator has actually treated equally all parties [ie., the fulfilment of the 1st Duty (Section 20 AA)], the 1st Rule may still be breached by the arbitrator if there is biasness, partiality or lack of independence on the part of the arbitrator in the objective perception of a “fair-minded and informed observer” - please refer to the judgment of Lord Hodge DPSC in United Kingdom’s Supreme Court in Halliburton Co v Chubb Bermuda Insurance Ltd (formerly known as Ace Bermuda Insurance Ltd) & Ors (International Court of Arbitration of the International Chamber of Commerce & Others Intervening) [2020] 3 WLR 1474, at [52];

the 2nd Rule includes the 2nd Duty (Section 20 AA) and is wider than the latter. For example, even if an arbitrator has fulfilled the 2nd Duty (Section 20 AA) by giving all the parties a “fair and reasonable opportunity” of presenting their cases, the 2nd Rule may still be breached if, for example, an arbitrator makes an award based on a matter which is the arbitrator’s own “invention or idea” - please refer to the judgment of VK Rajah JA in Singapore’s Court of Appeal in Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3 SLR 86, at [29] and [41];

in deciding whether the 2 Rules and/or 2 Duties (Section 20 AA) have been breached or not, the court should consider the following two matters -

by reason of s 21(3)(b) AA, an arbitrator may draw on his or her “own knowledge and expertise” - please refer to the Federal Court’s judgment delivered by Abdul Rahman Sebli FCJ in Pancaran Prima Sdn Bhd v Iswarabena Sdn Bhd [2021] 1 MLJ 1, at [3], [34], [54], [62]-[64], [78], [82], [90], [91] and [99]-[102]; and

an arbitrator is the master of arbitral procedure to be adopted in the arbitration (“Arbitrator is Master of Procedure” Concept). The “Arbitrator is Master of Procedure” Concept is clear from the following -

according to s 21(2) AA, an arbitrator may “conduct the arbitration in such manner as [the arbitrator] considers appropriate”;

(ii) s 21(3)(i) AA empowers an arbitrator to “make such other orders as the [arbitrator] considers appropriate”; and

(iii) in the High Court case of Ranhill Bersekutu Sdn Bhd v Safege Consulting Engineers & Anor [2004] 3 MLJ 554, at [15], Raus Sharif J (as he then was) has decided as follows - “[15] It is settled law that an arbitrator is the master of procedure to be followed in an arbitration and he has complete and unfettered discretion in the matter. The House of Lords in the case of Bremer Vulkan Schiffbau Und Maschinenfabrik v South India Shipping Corpn [1981] 1 All ER 289 (refd) (HL) held that, at p 301: … By appointing a sole arbitrator pursuant to a private arbitration agreement which does not specify expressly or by reference any particular procedural rules, the parties make the arbitrator the master of the procedure to be followed in the arbitration … he has complete discretion to determine how the arbitration is to be conducted from the time of his appointment to the time of his award, so long as the procedure he adopts does not offend the rule of natural justice.” (emphasis added);

if there is a breach of any one of the 2 Rules and/or 2 Duties (Section 20 AA) [Breach (2 Rules/Section 20 AA)], the Breach (2 Rules/Section 20 AA) in itself does not mean that ipso facto the court shall set aside an arbitral award under s 37(1)(b)(ii), (2)(b)(i) and/or (ii) AA. This is clear from the following two Federal Court cases (in chronology) -

in Jan De Nul (M) Sdn Bhd & Anor v Vincent Tan Chee Yioun & Anor [2019] 2 MLJ 413, at [55] and [58], Ramly Ali FCJ has decided as follows [Test (Jan De Nul)] - “[55] Section 37(2)(b)(ii) [AA] provides that an award made by an arbitral tribunal would be in conflict with the public policy of Malaysia if a breach of the rules of natural justice occurred in connection with the making of the award. The circumstances stated in s 37(2) are by no means exhaustive. Other appropriate circumstances 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 s 37(2) [AA]. However, it must be appreciated that the concept of public policy generally is itself a broad concept. But in applying the concept for the purpose of setting aside an award under s 37 [AA], the concept of public policy ought to be read narrowly and more restrictively. 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. As clearly stated by the Court of Appeal in Sigur Ros (with which we agree): ‘The concept of public policy must be one 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’. … [58] The scope of public policy ground for setting aside an arbitral award could only be invoked in deserving case ie in instances where it appears a violation of the most basic notions of morality and justice. It covers fundamental principles of law and justice in substantive as well as procedural respect. Instances where the upholding of an arbitral award would shock the conscience, or clearly injurious to the public good, or wholly offensive to the ordinary reasonable and fully informed member of the public, had been held by courts in various jurisdiction to fall within the category of public policy ground for setting aside an arbitral award. Thus, instances such as ‘patent injustice’, ‘manifestly unlawful and unconscionable’, substantial injustice’, ‘serious irregularity’ and other similar serious flaws in the arbitral process and award, would also fall within the applicable concept of public policy and therefore by virtue of s 37(1)(b)(ii) [AA] when proven, can be a ground for the court to exercise its discretion to set aside the award (see: Ajwa for Food Industries). Such instances fall within ‘the basic and fundamental notions or principles of justice’. The court must adopt the principle as laid down by Howard M Holtzmann and Joseph E Neuhans as found in their commentary in A guide to the UNCITRAL Model on International Commercial Arbitration: Legislative History and Commentary ‘that the term ‘public policy’ which was used in the 1958 New York Convention and many other treaties, covered fundamental principles of law and justice in substantive as well as procedural respects’. The terms ‘patent injustice’ or ‘substantial injustice’ or ‘manifestly unlawful and unconscionable’ as often used by the court in setting aside arbitral awards, 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 right of the applicant (see: Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3 SLR 86).” (emphasis added); and

according to Vernon Ong FCJ in Master Mulia Sdn Bhd v Sigur Ros Sdn Bhd [2020] 12 MLJ 198, at [53] and [58] [Test (Master Mulia)] - “[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. 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. … [58] This reading is supported by the case law in New Zealand where the setting aside provision on the NZ Act mirrors s 37 [AA]. Like s 37(2)(b) [AA], Article 34(6)(b), Schedule 1 of the NZ Act does not stipulate the requirement of prejudice (Kyburn (supra); Trustees of Rotoaira Forest Trust v Attorney General [1999] 2 NZLR 452). To reiterate, these decisions make the following points. First, the imposition of a requirement of prejudice narrows down what is intended to be a wide discretion (Kyburn (supra) at p 564); Second, provisions allowing for the setting aside of arbitral awards can be said to vest in the court a wide discretion to set aside awards. The question of whether an award ought to be set aside for breach of natural justice therefore does not turn on prejudice. It turns, instead, on amongst other things, the significance of the breach and the extent to which it might or may have affected the outcome of the arbitration. It is not necessary to show that the breach did in fact affect the outcome (Kyburn (supra) at p 653). Procedural prejudice would be sufficient to ground an application to set aside (Rotaoira (supra) at p 462). Fourth, there is no basis on which it can be said that the onus is on the applicant to show that the consequences of the breach are sufficiently material to warrant setting aside an award. The ordinary burden on an applicant cannot be elevated to a legal requirement to show that the outcome would be different had the breach not occurred (Kyburn (supra) at p 654). Fifthly, materiality of the breach and the possible effect on the outcome are treated as relevant factors going to the exercise of the discretion, such as the likely costs of holding a re-hearing (Kyburn (supra) at p 654). Lastly, prejudice, if it can be shown, would be material. However, no single factor is decisive or necessary for an award to be set aside (Kyburn (supra) at p 654). Kyburn (supra) was cited with approval by this Court in Jan De Nul (M) Sdn Bhd (supra)). We are in agreement with the view expressed by the Court of Appeal that the threshold under s 37 is very low as compared to that under s 42 [AA] (see para. [38] of the Court of Appeal’s written judgment).” (emphasis added);

by reason of Parliament’s employment of the permissive term “may” in s 37(1) AA, the court has a discretion to set aside an arbitral award under any one of the grounds stipulated in s 37(1)(a)(i) to (vi), (b)(i) and (ii) AA. Needless to say, the exercise of the court’s discretion to set aside an arbitral award under s 37(1) AA depends on the particular facts of the case in question. Consequently, from the view point of stare decisis doctrine, cases regarding the setting aside of arbitral awards, strictly speaking, do not constitute binding legal precedents;

according to s 36(1) AA, arbitral awards are final (First Consideration). Parliament has not provided any appeal to the court against an arbitral award (Second Consideration). An application to set aside an arbitral award under s 37(1) AA [Section 37(1) Application] is not an appeal to the court against the arbitral award (Third Consideration). Nor is a Section 37(1) Application a Judicial Review of an arbitral award (Fourth Consideration). Section 8 AA is clear that the court “shall” not intervene in any matter governed by AA unless so provided in AA (Fifth Consideration). In view of the 1st to 5th Considerations, the court should not review or revisit the merits of an arbitral award in a Section 37(1) Application, lest the Section 37(1) Application is in substance an “appeal” against the arbitral award under the guise of a Section 37(1) Application; and

the legal and evidential burdens to persuade the court to set allow a Section 37(1) Application are solely on the applicant.” (emphasis added). G(3). Did Arbitrator breach 2nd Rule?

According to learned counsel for LH and LY, the Arbitrator had breached the 2nd Rule in this case as follows:

the Arbitrator did not consider the submissions made by LH and LY in the Arbitration;

the Arbitrator had applied his own knowledge and experience in the interpretation of clauses 24.1, 30.10(a) and (b) COC without giving the parties an opportunity to submit on the same; and

the Arbitrator acted in excess of his jurisdiction regarding two matters which had been stated in the above paragraph 40.

I am of the view that the 2nd Rule had not been breached by the Arbitrator. My reasons are as follows:

the Arbitrator had given LH and LY their right to adduce evidence and to submit on all the 5 Issues (Arbitration);

so long as the Arbitrator had decided the 5 Issues (Arbitration), the 2nd Rule did not require the Arbitrator to decide in the Award each and every submission of LH and LY;

the 2nd Rule did not require the Arbitrator to accept the reasons and/or reasoning of the parties as adduced by the parties through their witnesses and written submissions in the Arbitration. This is because as explained by Abdul Rahman Sebli FCJ (as he then was) in the Federal Court case of Pancaran Prima Sdn Bhd v Iswarabena Sdn Bhd [2021] 1 MLJ 1, at [3], [34], [54], [62] to [64], [78], [82], [90], [91] and [99] to [102], the Arbitrator could rely on his own knowledge and expertise. Consequently, the Arbitrator could give reasons and/or reasoning in the Award which were different from the submission of parties in the Arbitration;

the Arbitrator’s rejection of certain evidence and contentions advanced by LH and LY in the Arbitration, in itself, does not amount to a breach of the 2nd Rule by the Arbitrator. If otherwise, a party who has lost an arbitration can simply allege that the arbitral tribunal has contravened the 2nd Rule by the arbitral tribunal’s mere dismissal of the party’s evidence and submission; and

it is to be noted that in this case, the Arbitrator had accepted the following submissions by LH and LY -

the Arbitrator decided that QS’s Valuations (Variation Works) in QS’s SFA (1st Contract) and QS’s SFA (2nd Contract) were final and conclusive. Consequently -

SQA could not claim for Variation Works (1st Contract) and Variation Works (2nd Contract); and

(ii) the 2nd Issue (Arbitration) was determined in favour of LH and LY; and

with regard to part of the 5th Issue (Arbitration), the Arbitrator held that there were Defects (Rooftop Ponding) wherein SQA was liable for Rectification Cost (Rooftop Ponding).

As explained in the above paragraph 51, the Arbitrator did not breach the second part of s 20 AA (each party shall be given a fair and reasonable opportunity of presenting that party’s case) [2nd Part (Section 20 AA)].

Alternatively or additionally, I am not satisfied that LH and LY have succeeded to discharge the legal and evidential burden to prove that the Arbitrator had breached the 2nd Rule and/or 2nd Part (Section 20 AA).

G(4). Whether Arbitrator had contravened 1st Rule Learned counsel for LH and LY has invited the court to decide that the 1st Rule had been breached by the Arbitrator based on the following contentions [Alleged Arbitrator’s Breach (1st Rule)]:

before the Award, the Arbitrator had pre-decided in favour of SQA against LH and LY (Alleged Arbitrator’s Pre-Award) when the Arbitrator -

made certain statements in the presence of learned counsel for LH, LY and SQA as well as the witness who was giving evidence at the time in question; and

posed certain questions to witnesses. The Alleged Arbitrator’s Pre-Award took place as follows -

when Mr. Koh Kok Seong, the second witness for LH and LY, was cross-examined by SQA’s learned counsel on 23.10.2019;

(ii) during the cross-examination of Mr. Chong Yi Puil, the third witness for LH and LY (CW3), by learned counsel for SQA on 23.10.2019;

(iii) when CW3 was re-examined by learned counsel for LH and LY on 13.11.2019;

(iv) when learned counsel for LH and LY cross-examined Mr. Lim Keng Lui, SQA’s the second witness (RW2), on 17.7.2020 (the Alleged Arbitrator’s Pre-Award took place on two separate occasions) and 24.7.2020; and

during the “hot-tubbing” session (Hot-Tubbing Session) when Mr. Wong (expert for LH and LY) and Mr. Chung (SQA’s expert) gave expert testimonies on 21.8.2020 (the Alleged Arbitrator’s Pre-Award happened on many occasions in the Hot-Tubbing

at the Hot-Tubbing Session, the Arbitrator allowed SQA’s learned counsel to answer for Mr. Chung; and

on 24.7.2020, the Arbitrator “prevented” learned counsel for LH and LY from cross-examining RW2 regarding SQA’s EOT applications because according to the Arbitrator, those questions should be posed to the two experts, Mr. Wong and Mr. Chung (2 Experts), when the Hot-Tubbing Session commenced subsequently. However, on the same day, in the subsequent Hot-Tubbing Session, the Arbitrator held that the 2 Experts were not architects who could give expert opinions on EOT. Hence, there was a self-contradiction in the Arbitrator’s conduct of the Arbitration (Alleged Arbitrator’s Self-Contradiction).

It is decided in Ragawang Corporation, at [34], as follows: “[34] In deciding whether an arbitrator has breached the 1st Rule and/or 1st Duty (Section 20 AA), I am of the following opinion:

the court should first decide whether there is actual biasness, partiality or lack of independence on the part of the arbitrator (Actual Biasness); and

if there is no Actual Biasness, the court should then decide whether there is biasness, partiality or lack of independence on the arbitrator’s part in the objective view of a “fair-minded and informed observer” (Perceived Biasness) - Halliburton. In deciding the existence of Perceived Biasness, the following three tests (3 Tests) are applicable -

the “reasonable suspicion of bias” test has been applied by the High Court in the following two cases -

the judgment of Nik Hashim J (as he then was) in Kuala Ibai Development Sdn Bhd v Kumpulan Perunding (1988) Sdn Bhd & Anor [1999] 1 CLJ 632, at 641-642; and

(ii) Lee Swee Seng JC’s (as he then was) decision in Dato Dr. Muhammad Ridzuan bin Mohd Salleh & Anor v Syarikat Air Terengganu Sdn Bhd [2012] 3 MLJ 737, at at [30] and [31];

the “real danger of bias” test - please refer to, eg., the Federal Court’s judgment delivered by Edgar Joseph Jr FCJ in Majlis Perbandaran Pulau Pinang v Syarikat Bekerjasama-sama Serbaguna Sungai Gelugor Dengan Tanggungan [1999] 3 CLJ 65, at 128-129; or

the “real possibility of bias” test has been applied by Hasan Lah FCJ in the Federal Court case of Bar Council v Tun Dato’ Seri Arifin Bin Zakaria & Ors [2020] 4 MLJ 773, at [35].” (emphasis added).

Firstly, the notes of evidence of the Arbitration (NOE) should be considered in totality. The court should not only peruse certain passages in the NOE which showed the Alleged Arbitrator’s Breach (1st Rule), including the Alleged Arbitrator’s Pre-Award and Alleged Arbitrator’s Self-Contradiction.

After perusing the NOE in totality, I am satisfied that there was no actual biasness, actual partiality and/or actual lack of independence on the part of the Arbitrator in this case. This decision is fortified by the following reasons:

the Arbitrator had a discretion to ask questions in the Arbitration (Arbitrator’s Questions). The Arbitrator’s Questions are made so as to enable the Arbitrator to decide the Arbitration in a just manner;

witnesses were at liberty to answer the Arbitrator’s Questions;

learned counsel for LH and LY could question witnesses regarding their answers to the Arbitrator’s Questions;

any statement made by the Arbitrator in the Arbitration (Arbitrator’s Statements) did not ipso facto mean that the Arbitrator had made a Pre-Award. More importantly, learned counsel for LH and LY could have replied or corrected the Arbitrator’s Statements in the Arbitration; and

irrespective of the Arbitrator’s Questions and Arbitrator’s Statements, learned counsel for LH and LY are at liberty to draft written submission to support the contentions of LH and LY in the Arbitration. In other words, LH and LY did not suffer any injustice due to the Arbitrator’s Questions and Arbitrator’s Statements.

Secondly, with regard to the issue of whether there is perceived biasness, perceived partiality or perceived lack of independence on the Arbitrator’s part in this case, premised on the reasons stated in the above sub-paragraphs 57(1) to (5), I am satisfied that in the objective view of a “fair-minded and informed observer” who has taken into consideration the entire NOE and the Alleged Arbitrator’s Breach (1st Rule) (including the

there is no “real danger of bias” on the Arbitrator’s part in the Arbitration;

no “reasonable suspicion of bias” on the part of the Arbitrator can arise in this case; and/or

there can be no “real possibility of bias” by the Arbitrator in the Arbitration.

A reading of the entire NOE does not disclose any breach of the first part of s 20 AA (The parties shall be treated with equality) [1st Part (Section 20 AA)]. This decision is fortified by the reasons expressed in the above sub-paragraphs 57(1) to (5).

Lastly, I am of the view that LH and LY have failed to discharge the legal and evidential burden to prove that the Arbitrator had breached the 1st Rule and/or 1st Part (Section 20 AA) in this case. G(5). Should court set aside Award?

For the sake of completeness, the court will now assume that the Arbitrator had breached the 2 Rules and/or s 20 AA (Arbitrator’s Breaches).

I have no hesitation to decide that despite the Arbitrator’s Breaches, this court should not exercise its discretion to set aside the Award under s 37(1)(b)(ii), (2)(b)(i) and/or (ii) AA. The following reasons support this decision:

applying the test laid down by Ramly Ali FCJ in the Federal Court case of Jan De Nul (M) Sdn Bhd & Anor v Vincent Tan Chee Yioun & Anor [2019] 2 MLJ 413, at [55] and [58], I am of the following view -

the Arbitrator had not violated “the most basic notions of morality and justice” in making the Award;

the Award would not “shock the conscience”;

the Award were not “injurious to the public good”;

the Award were not “wholly offensive to the ordinary reasonable and fully informed member of the public”;

there was no “patent injustice” to LH and LY in the Arbitration and Award;

the Arbitration and Award were not “manifestly unlawful and unconscionable”; and

there was no “substantial injustice”, “serious irregularity” and other “similar serious flaws” in the Arbitration and Award; and

based on the test expounded by Vernon Ong FCJ in the Federal Court in Master Mulia Sdn Bhd v Sigur Ros Sdn Bhd [2020] 12 MLJ 198, at [53] and [58] -

the nature of the Arbitrator’s Breaches was not serious in the sense that the Arbitrator’s Breaches were not material to the outcome of the Arbitration; and

even if the Arbitrator’s Breaches were serious, the Arbitrator’s Breaches would not have any real impact on the Award. In other words, notwithstanding the Arbitrator’s Breaches, the Arbitrator would still have arrived at the Award.

G(6). Decision in OS No. 10 In view of the reasons stated in the above Parts G(1) to G(5), OS No. 10 must be refused.

OS No. 8 The relevant parts of ss 38 and 39 AA are reproduced below: “s 38 Recognition and enforcement

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 recognised as binding and be enforced by entry as a judgment in terms of the award or by action. s 39 Grounds for refusing recognition or enforcement

Recognition or enforcement of an award, irrespective of the State in which it was made, may be refused only at the request of the party against whom it is invoked -

where that party provides to the High Court proof that -

a party to the arbitration agreement was under any incapacity;

(ii) the arbitration agreement is not valid under the law to which the parties have subjected it, or, failing any indication thereon, under the laws of Malaysia;

(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 (2), the award contains decisions on matters beyond the scope of the submission to arbitration;

(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 [AA] from which the parties cannot derogate, or, failing such agreement, was not in accordance with [AA]; or

(vii) the award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which, or under the law of which, that award was made; or

if the High Court finds that -

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

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

As decided by Tengku Maimun CJ in the Federal Court case of Siemens Industry Software GmbH & Co KG (Germany) (formerly known as Innotec GmbH) v Jacob and Toralf Consulting Sdn Bhd (formerly known as Innotec Asia Pacific (M) Sdn Bhd & Ors [2020] 3 MLJ 1, at [29], [37] and [53], all the procedural requirements to enforce the Award have been fulfilled by SQA in respect of OS No. 8.

LH and LY have the onus to satisfy the court that OS No. 8 should be refused due to the existence of any one of the grounds stated in s 39(1)(a)(i) to (vii), (b)(i) and (ii) AA - please refer to Murray & Roberts Australia Pty Ltd v Earth Support Company (SEA) Sdn Bhd [2015] 3 AMR 152, at [63]-[65]. Due to the reasons stated in the above Parts G(1) to G(5), I am not persuaded that LH and LY have discharged this burden. H(1). Can court grant declarations under s 38(1) AA?

Section 41 SRA and O 15 r 16 RC state as follows: “s 41 SRA Discretion of court as to declaration of status or right Any person entitled to any legal character, or to any right as to any property, may 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 therein a declaration that he is so entitled, and the plaintiff need not in that suit ask for any further relief: Provided that no court shall make any such declaration where the plaintiff, being able to seek further relief than a mere declaration or title, omits to do so. O 15 r 16 RC Declaratory judgment No action or other proceeding shall be open to objection merely on the ground that a declaratory judgment or order is sought thereby, and the Court may make binding declarations of right whether or not consequential relief is or could be claimed.” (emphasis added).

I am of the view that the court has no discretionary power pursuant to s 41 SRA and O 15 r 16 RC to grant a declaration that SQA was entitled to the 2 Adjudicated Amounts. This decision is premised on the following reasons:

s 38(1) AA only confers power on the court to make either one of the two following orders [2 Possible Orders (Section 38 AA)] -

an order to recognise an arbitral award as binding and enforceable by entry as a judgment in terms of the arbitral award [1st Possible Order (Section 38 AA)]; or

an order to enforce an arbitral award by way of a fresh action filed in court (Fresh Suit) by a party in whose favour the arbitral award is made [2nd Possible Order (Section 38 AA)]. If a Fresh Suit is filed by SQA against LH and LY, SQA may pray for, among others, a declaratory order. OS No. 8 is not a Fresh Suit instituted by SQA against LH and LY for a court order to enforce the Award [the 2nd Possible Order (Section 38 AA)]. As such, OS No. 8 -

can only apply for the 1st Possible Order (Section 38 AA); and

(ii) cannot apply for a declaration that SQA was entitled to the 2 Adjudicated Amounts as against LH and LY; and

even if my interpretation of s 38(1) AA in the above sub-paragraph

is erroneous and it is thus assumed that the court has a discretion under s 41 SRA read with O 15 r 16 RC to grant a declaration, I am not minded to exercise such a discretionary power because any declaration that SQA was entitled to the 2 Adjudicated Amounts would be contrary to -

the judgment of our apex court in Jack-In Pile that CIPAA has no retrospective effect and cannot apply to the 2 Contracts; and

the Court of Appeal’s Decisions (2 Adjudication Decisions) which have already set aside the High Court’s Decisions (2 Adjudication Decisions) and 2 Adjudication Decisions. H(2). Whether court can order LH and LR to pay 2 Adjudicated

Amounts to SQA under s 38(1) AA As explained in the above sub-paragraph 68(1) -

OS No. 8 is not a Fresh Suit commenced by SQA against LH and LY for the 2nd Possible Order (Section 38 AA) which may include an order for LH and LY to pay the 2 Adjudicated Amounts to SQA; and

OS No. 8 can only apply for the 1st Possible Order (Section 38). Consequently, the court cannot grant an order in OS No. 8 for LH and LR to pay the 2 Adjudicated Amounts to SQA. H(3). Can court’s recognition of Award under s 38(1) AA include Arbitrator’s Decision (2 Adjudicated Amounts)?

In the light of -

Jack-In Pile;

the Court of Appeal’s Decisions (2 Adjudication Decisions); and

the Arbitrator’s Decision (2 Adjudicated Amounts) I accept the submission by SQA’s learned counsel that it is only just for the court to make the 1st Possible Order (Section 38) to include the Arbitrator’s Decision (2 Adjudicated Amounts). If otherwise -

there will be an injustice to SQA because SQA had not been paid by LH and LY for Works which formed the subject matter of the Arbitrator’s

(2 Adjudicated Amounts) [Works (2 Adjudicated Amounts)]; and

LH and LY would be unjustly enriched by way of evasion of payment to SQA with regard to the Works (2 Adjudicated Amounts). H(4).

Outcome of OS No. 8 Premised on the reasons explained in the above Parts H and H(1) to H(3), this court makes an order in OS No. 8 that the Award is recognized as binding and enforceable by entry as a judgment in terms of the Award as follows, among others:

LH and LY shall pay to SQA the following amounts -

RM2,279,718.85 (after taking into account the payments of the 2 Adjudicated Amounts by LH and LY to SQA); and

RM2,358,981.07 [the 2 Adjudicated Amounts which had been returned by SQA to LH and LY due to the effect of the Court of Appeal’s Decisions (2 Adjudication Decisions)];

LH and LY shall pay to SQA interest at the rate of 5% per annum (pa) on the sum of RM2,279,718.85 from 26.9.2017 until the date of full payment of the same; and

LH and LY shall pay to SQA interest at the rate of 5% pa on the amount of RM2,358,981.07 from 6.12.2022 until the date of full payment of the same. I.

OS No. 14 After the delivery of the Award, SQA’s solicitors applied to the Arbitrator by way of a letter dated 1.10.2021 (copied to the solicitors for LH and LY) for the Arbitrator to tax the Costs (Arbitration) [SQA’s Application For Arbitrator’s Taxation (Costs)].

By way of a letter dated 4.10.2021, the solicitors for LH and LY objected strenuously to SQA’s Application For Arbitrator’s Taxation (Costs) [Objection To Arbitrator’s Taxation (Costs)]. The Objection To Arbitrator’s Taxation (Costs) was based on the following grounds, among others:

if the Arbitrator did not tax the Costs (Arbitration) in the Award, the Arbitrator was functus officio after the delivery of the Award and could not tax the Costs (Arbitration) thereafter;

SQA did not request the Arbitrator to tax the Costs (Arbitration) within 30 days from SQA’s receipt of the Award as required by s 82 34(4) AA [I think the intention of the solicitors for LH and LY was to refer to s 35(4) AA and not s 34(4) AA]; and

OS No. 8, OS No. 9 and OS No. 10 had already been filed on the date of SQA’s Application For Arbitrator’s Taxation (Costs). Consequently, SQA’s Application For Arbitrator’s Taxation (Costs) was an afterthought.

The Arbitrator responded to SQA’s Application For Arbitrator’s Taxation (Costs) and Objection To Arbitrator’s Taxation (Costs) in a letter dated 7.10.2021 which stated as follows:

as LH and LY had applied to the High Court to set aside the Award, this would render “impractical” the Arbitrator’s taxation of the Costs (Arbitration); and

the Arbitrator “urged” the parties to apply to the High Court for a taxation of the Costs (Arbitration) [Arbitrator’s Refusal To Tax Costs (Arbitration)]. I(1). Could Arbitrator tax Costs (Arbitration) in this case?

I reproduce below the relevant part of s 44 AA: “s 44 Costs and expenses of an arbitration

Unless otherwise agreed by the parties -

the costs and expenses of an arbitration shall be in the discretion of the arbitral tribunal who may -

direct to and by whom and in what manner those costs or any part thereof shall be paid;

(ii) tax or settle the amount of such costs and expenses; and

(iii) award such costs and expenses to be paid as between solicitor and client;

any party may apply to the High Court for the costs to be taxed where an arbitral tribunal has in its award directed that costs and expenses be paid by any party, but fails to specify the amount of such costs and expenses within thirty days of having being requested to do so; or

each party shall be responsible for its own legal and other expenses and for an equal share of the fees and expenses of the arbitral tribunal and any other expenses relating to the arbitration in the absence of an award or additional award fixing and allocating the costs and expenses of the arbitration. …

A taxation of costs, fees and expenses under this section may be reviewed in the same manner as a taxation of costs.” (emphasis added).

I am of the following view:

an arbitral tribunal has a statutory discretionary power to tax arbitration costs under s 44(1)(a)(ii) AA [Arbitral Tribunal’s Taxation Power (Costs)];

the only exception to the Arbitral Tribunal’s Taxation Power (Costs) is when the parties in the arbitration have agreed that the Arbitral Tribunal has no power to tax arbitration costs [Sole Exception (Arbitral Tribunal’s Costs Taxation Power)]. The Sole Exception (Arbitral Tribunal’s Costs Taxation Power) is clear from the opening words in s 44(1) AA (Unless otherwise agreed by the parties);

in view of the Sole Exception (Arbitral Tribunal’s Costs Taxation Power) and the clear words in s 44(1)(a)(ii), the Arbitral Tribunal’s Taxation Power (Costs) is not affected in any manner if the parties in the arbitration have already filed any application under ss 37, 38 and/or 42 AA. If Parliament had intended for the Arbitral Tribunal’s Taxation Power (Costs) to be exercised before the filing of any application under ss 37, 38 and/or 42 AA, Parliament would have expressly stated as such in s 44(1) AA. The legislature however had deliberately omitted to do so; and

the functus officio doctrine is provided by case law and is always subject to written law - please refer to Dewani Design Sdn Bhd v Zhongji Construction Sdn Bhd [2023] 2 MLRH 84, at [35(1)]. It is thus clear that the case law doctrine of functus officio cannot override the will of the legislature in s 44(1) AA which has provided for the Sole Exception (Arbitral Tribunal’s Costs Taxation Power) and Arbitral Tribunal’s Taxation Power (Costs). Accordingly, if parties to the arbitration agreement have not agreed that an arbitral tribunal cannot tax arbitration costs [ie., the Sole Exception (Arbitral Tribunal’s Costs Taxation Power) does not apply], the functus officio doctrine cannot bar the exercise of the Arbitral Tribunal’s Taxation Power (Costs). If otherwise, this will render nugatory the clear words of Parliament in s 44(1)(a)(ii) AA.

As explained in the above sub-paragraph 76(3), notwithstanding the prior filing of OS No. 8, OS No. 9 and OS No. 10, the Arbitrator had the statutory discretion pursuant to s 44(1)(a)(ii) CA to tax the Costs (Arbitration).

Despite the Objection To Arbitrator’s Taxation (Costs), the case law doctrine of functus officio could not restrain the exercise of the Arbitrator’s statutory discretionary power under s 44(1)(a)(ii) CA to tax the Costs (Arbitration) - please refer to the above sub-paragraph 76(4).

Court’s power to determine arbitraton costs The relevant part of s 35 AA reads as follows: “35(1) Correction and interpretation of award or additional award

A party, within thirty days of the receipt of the award, unless any other period of time has been agreed upon by the parties -

upon notice to the other party, may request the arbitral tribunal to correct in the award any error in computation, any clerical or typographical error or other error of similar nature; or

upon notice to and with the agreement of the other party, may request the arbitral tribunal to give an interpretation of a specific point or part of the award.

Where the arbitral tribunal considers the request made under subsection (1) to be justified, it shall make the correction or give the interpretation within thirty days of the receipt of the request and such interpretation shall form part of the award.

The arbitral tribunal may correct any error of the type referred to in paragraph (1)(a) on its own initiative within thirty days of the date of the award. ...

The arbitral tribunal may, where it thinks necessary, extend the period of time within which it shall make a correction, interpretation or an additional award under this section. …” (emphasis added).

When an arbitral tribunal has directed a party (R) to pay arbitration costs to another party (S) but the arbitral tribunal has not specified the amount of arbitration costs, I am of the following opinion:

any party, R and/or S, may apply to the High Court for a taxation of the arbitration costs pursuant to s 44(1)(b) AA [Court’s Taxation Power (Costs)];

premised on the opening words in s 44(1) AA (Unless otherwise agreed by the parties), there is only one exception to the Court’s Taxation Power (Costs), namely, when R and S have agreed that the court has no power to tax arbitration costs [Sole Exception (Court’s Taxation Power)];

in view of the Sole Exception (Court’s Taxation Power) and the clear provision in s 44(1)(b), the Court’s Taxation Power (Costs) is not extinguished if an application under ss 37, 38 and/or 42 AA has already been filed by R and/or S; and

s 35(1)(a) and (3) AA provide for, among others, the arbitral tribunal’s power to correct an award in certain circumstances [please refer to paragraph 89 below]. The clear words in s 44(1)(b) do not disclose Parliament’s intention for s 35 AA to be an exception to s 44(1)(b) AA. Hence, contrary to the submission of learned counsel for LH and LY, the Court’s Taxation Power (Costs) pursuant to s 44(1)(b) AA cannot be curtailed in any manner by s 35(1)(a) and

AA. I(3).

Arbitrator should have taxed Costs (Arbitration) As between the Arbitral Tribunal’s Taxation Power (Costs) and the Court’s Taxation Power (Costs), I am firmly of the view that as a general rule, the Arbitral Tribunal’s Taxation Power (Costs) [not the Court’s Taxation Power (Costs)] should first be exercised. This opinion is premised on the following reasons:

according to s 36(1) AA, an “award” made by an arbitral tribunal pursuant to an arbitration agreement shall be final and binding on the parties to the arbitration agreement. The definition of “award” in s 2(1) AA “includes … any award on costs”. Upon the exercise of the Arbitral Tribunal’s Taxation Power (Costs) -

the arbitral tribunal’s award on costs [Award (Costs)] “shall” be final pursuant to s 36(1) AA; and

all parties in the arbitration have no right to appeal to the High Court against the Award (Costs);

if the Arbitral Tribunal’s Taxation Power (Costs) is not invoked, the Court’s Taxation Power (Costs) has to be resorted to. It is to be emphasized that the Court’s Taxation Power (Costs) is not an optimal use of limited judicial resources. Furthermore, an exercise of Arbitral Tribunal’s Taxation Power (Costs) will save parties from expending valuable time, effort and expenses in the Court’s Taxation Power (Costs); and

as between an arbitral tribunal who has conducted the arbitral proceedings and the court, the arbitral tribunal is in a far better position than the court to tax arbitration costs. This is because the arbitral tribunal has first-hand knowledge of the arbitral proceedings which will greatly assist the arbitral tribunal’s taxation of arbitration costs. On the other hand, the court has to start afresh the taxation of arbitration costs.

In this case, despite the Objection To Arbitrator’s Taxation (Costs), as explained in the above paragraph 81, the Arbitrator should have taxed the Costs (Arbitration) under s 44(1)(a)(ii) AA. With respect to the Arbitrator, the Arbitrator’s Refusal To Tax Costs (Arbitration) amounted to an abdication of the Arbitrator’s statutory discretionary power pursuant to s 44(1)(a)(ii) AA. Worse still, the Arbitrator’s Refusal To Tax Costs (Arbitration) had unnecessarily burdened the court to tax the Costs (Arbitration) under s 44(1)(b) AA. SQA had to expend much time, effort and legal fees to file and conduct OS No. 14. For the sake of completeness, I do not accept the Arbitrator’s view in the Arbitrator’s Refusal To Tax Costs (Arbitration) that due to the fact that LH and LY had applied to the High Court to set aside the Award, it was “impractical” for the Arbitrator to tax the Costs (Arbitration).

In view of the reasons stated in the above paragraph 81, unless the parties have agreed otherwise, it is my hope that as a general rule, an arbitral tribunal (not the court) should tax arbitration costs pursuant to s 44(1)(a)(ii) AA.

Effect of RC When AA was enacted, the Rules of the High Court 1980 (RHC) were applicable. RHC provided for taxation of costs and review of taxation of costs. That is why s 44(5) AA provides for a review of taxation of costs. RHC were then repealed by the present RC. RC do not provide for taxation of costs and review of taxation of costs. Instead, RC provides for the court’s power to “determine” (not “tax”) costs. Accordingly, the term “taxation” as provided in s 44 AA, in my view, means “determination” of costs under RC. I(5). Can SQA file OS No. 14?

Before I discuss the objections to OS No. 14 which have been advanced by learned counsel for LH and LY, I wish to state that notwithstanding the prior filing of OS No. 8, OS No. 9 and OS No. 10, SQA is entitled to institute OS No. 14 - please refer to the above sub-paragraph 80(3).

Learned counsel for LH and LY have relied on the following grounds to persuade me to dismiss OS No. 14:

the Arbitrator could not delegate to the court the Arbitrator’s discretionary power to tax the Costs (Arbitration);

part of the Award regarding the Costs (Arbitration) was ambiguous and consequently, the High Court could not the tax the Costs (Arbitration); and

SQA should have applied to the Arbitrator to tax the Costs (Arbitration) under s 35(1)(a) and (3) AA.

Firstly, as explained in the above sub-paragraph 80(1), the court has a statutory power to tax the Costs (Arbitration) under s 44(1)(b) AA. Such a power is conferred on the court by Parliament by way of s 44(1)(b) AA. Hence, there is no delegation of power to tax the Costs (Arbitration) from the Arbitrator to the court. If I have accepted the above submission by learned counsel for LH and LY, this would have rendered redundant s 44(1)(b) AA.

Secondly, Sub-Paragraph N(3) Award is clear that if parties could not agree on the Costs (Arbitration), the Costs (Arbitration) could be taxed by the court.

Thirdly, I am of the view that LH and LY cannot rely on s 35 AA to oppose OS No. 14. My reasons are as follows:

s 35(1)(a) AA only applies when there exists any one or more of the following four errors in an arbitral award (4 Errors) -

there is an error in the award regarding the arbitral tribunal’s computation;

there exists a clerical error in the award;

there is a typographical error in the award; and

there exists in the award “other error of similar nature” to a computational error, clerical error and typographical error. In this case, the Award did not contain the 4 Errors;

the 30 days period from the day of receipt of the Award as stipulated in s 35(1) AA (30 Days Period), has long lapsed. There is no evidence in this case that LH, LY and SQA have agreed to extend the 30 Days Period. Nor is there evidence that the Arbitrator had decided to extend the 30 Days Period under s 35(6) AA; and

the Arbitrator had not corrected any computational error in the Award on his own initiative within 30 days of the date of the Award. There is therefore no room to invoke s 35(3) AA.

Lastly, if I have accepted any one of the contentions advanced by learned counsel for LH and LY as stated in the above paragraph 86 -

there will be an injustice to SQA as follows:

the Objection To Arbitrator’s Taxation (Costs) by LH and LY had led to the Arbitrator’s Refusal To Tax Costs (Arbitration). In other words, due to LH and LY, SQA could not have the Arbitrator tax the Costs (Arbitration); and

if OS No. 14 is dismissed on any one of the grounds submitted by learned counsel for LH and LY, SQA could not recover any amount of the Costs (Arbitration) despite being largely successful in the Arbitration against LH and LY; and

a dismissal of OS No. 14 will render academic Sub-Paragraph N(3) Award and s 44(1)(b) AA. I(6). Should Registrar tax Costs (Arbitration)?

SQA’s learned counsel has relied on O 59 r 12(1)(b) RC which states as follows: “O 59 r 12 Powers of Registrar to determine costs

Subject to Order 59, rule 7, the Registrar shall have power to determine - …

the costs directed by an award made on a reference to arbitration under any written law or pursuant to an arbitration agreement to be paid; …” (emphasis added).

Notwithstanding O 59 r 12(1)(b) RC, I am of the view the Court’s Taxation Power (Costs) should be done by a J/JC and not by the Registrar. This is because if the Registrar has taxed the Costs (Arbitration) pursuant to O 59 r 12(1)(b) RC [Registrar’s Taxation (Costs)], any party who is dissatisfied with the Registrar’s Taxation (Costs) may appeal to the J/JC under O 56 r 1(1) RC. However, if the Court’s Taxation Power (Costs) is conducted by the J/JC -

judicial time and effort need not be expended to hold the Registrar’s Taxation (Costs);

there will be a saving of time, effort and expenses of all parties when the Registrar’s Taxation (Costs) is not conducted; and

if there are applications filed under ss 37, 38 and 42 AA, all these three applications can be decided by the same J/JC together with the Court’s Taxation Power (Costs) (as in this case). In this manner, there is an expeditious and economical disposal of all the four applications (as in this instance). I(7). On what basis should court tax Costs (Arbitration)?

In support of OS No. 14, SQA’s learned counsel has submitted as follows:

reliance has been placed on O 59 r 17 RC; and

Costs (Arbitration) should be taxed on an “indemnity” basis according to the following cases -

the judgment of Edgar Joseph Jr SCJ in the High Court case of Teong Piling Co v Asia Insurance Co Ltd [1994] 1 MLJ 444; and

the decision of Douglas J in the Supreme Court of British Columbia in Allard v The University of British Columbia 2021 BCSC 60.

I reproduce below the relevant parts of O 59 rr 16 and 17 RC: “O 59 r 16 Basis of assessment

In assessing the costs payable in relation to any item, the Court shall have regard to all relevant circumstances, and in particular to -

the complexity of the item or of the cause or matter in which it arises and the difficulty or novelty of the questions involved;

the skill, specialized knowledge and responsibility required of, and the time and labour expended by, the solicitor or counsel;

the number and importance of the documents, however brief, prepared or perused;

the place and circumstances in which the business involved is transacted;

the importance of the cause or matter to the client;

where money or property is involved, its amount or value;

any other fees and allowances payable to the solicitor or counsel in respect of other items in the same cause or matter, but only where work done in relation to those items has reduced the work which would otherwise have been necessary in relation to the item in question.

Subject to the other provisions of these Rules, the amount of costs which any party are entitled to recover is the amount allowed after determination of costs on the standard basis where -

an order is made that the costs of one party to proceedings be paid by another party to those proceedings;

an order is made for the payment of costs out of any fund; or

no order for costs is required, unless it appears to the Court to be appropriate to order costs to be determined on the indemnity basis.

On an assessment of costs on the standard basis, there shall be allowed a reasonable amount in respect of all costs reasonably incurred and any doubts which the Court may have as to whether the costs were reasonably incurred or were reasonable in amount shall be resolved in favour of the paying party; and in these Rules, the term “the standard basis”, in relation to the determination of costs, shall be construed accordingly.

On a determination of costs on the indemnity basis, all costs shall be allowed except in so far as they are of an unreasonable amount or have been unreasonably incurred and any doubts which the Court may have as to whether the costs were reasonably incurred or were reasonable in amount shall be resolved in favour of the receiving party; and in these Rules, the term “the indemnity basis”, in relation to the determination of costs, shall be construed accordingly.

Where the Court makes an order for costs without indicating the basis of determination of costs or an order that costs be determined on any basis other than the standard basis or the indemnity basis, the costs shall be determined on the standard basis. … O 59 r 17 Costs payable to a solicitor by his own client

This Rule is in amplification and not in derogation of the procedure set out in the Legal Profession Act 1976.

On the determination of a solicitor’s bill to his own client (except a bill with respect to non-contentious business and a bill payable pursuant s. 5 of the Legal Aid Act 1971), all costs shall be allowed except in so far as they are of an unreasonable amount or have been unreasonably incurred.

For the purpose of paragraph (1), all costs incurred with the express or implied approval of the client shall be conclusively presumed to have been reasonably incurred and, where the amount thereof has been expressly or impliedly approved by the client, to have been reasonable in amount.

In paragraph (3), references to the client shall be construed -

if the client at the material time a mentally disordered person within the meaning of the Mental Health Act 2001 and was represented by a person acting as litigation representative, as references to that person acting, where necessary, with the authority of the Court; and

if the client was at the material time a minor and represented by a person acting as litigation representative, as references to that person.” (emphasis added).

Firstly, O 59 r 17 RC applies to an assessment of costs payable by a client to the client’s solicitor. In this case, Sub-Paragraph N(3) Award has clearly provided for a taxation of the Costs (Arbitration) on a “party to party” basis and not on a “solicitor-client” basis. Accordingly, I cannot accept SQA’s reliance on O 59 r 17 RC to support OS No. 14.

Secondly, I have decided in Ragawang Corporation Sdn Bhd v One Amerin Residence Sdn Bhd [2020] 7 AMR 365, at [63], as follows: “[63] As between litigating parties, it is clear from O 59 rr 16(2) to

and 21 RC that the court can only grant costs on a “standard basis” or an “indemnity basis” (not on a “solicitor-client basis”). …” (emphasis added).

Thirdly, I am of the following view regarding the basis for the court’s taxation of arbitration costs under s 44(1)(b) AA:

as a general rule, the court should exercise its discretion to tax arbitration costs on a standard basis pursuant to O 59 rr 16(2), (3) and (5) RC [General Rule (Arbitration Costs)] unless there is/are exceptional circumstance(s) for the court to tax costs on an indemnity basis under O 59 r 16(2) and (4) RC [Exception (Arbitration Costs)]; and

if a party intends to invoke the Exception (Arbitration Costs), that party has the burden to satisfy the court regarding the application of the Exception (Arbitration Costs).

Fourthly, the two cases cited by learned counsel for SQA can be distinguished from OS No. 14 as follows:

Teong Piling was decided based on RHC and before the advent of O 59 r 16(1) to (5) RC; and

Allard concerned the application of the then applicable s 11 of British Columbia’s (BC) Arbitration Act R.S.B.C. 1996, c. 55 [AA (BC)] (now repealed by BC’s Arbitration Act S.B.C 2020, c. 2) and r 41 of BCICAC (British Columbia International Commercial Arbitration Center) Rules (BCICAC Rules) which are materially different from our s 44(1)(b) AA and O 59 r 16(1) to (5) RC. I have to point out that the previous s 11(2)(a) AA (BC) and r 41(4)(c) BCICAC Rules have expressly allowed an arbitatir to consider “actual reasonable legal fees” and “legal and other expenses reasonably incurred in relation to the arbitration” respectively when the arbitrator determines arbitration costs.

In this case, I am satisfied that the General Rule (Arbitration Costs) should apply in the taxation of the Costs (Arbitration) because there were no special circumstances to apply the Exception (Arbitration Costs). In any event, SQA has not succeeded to discharge the onus to persuade this court to invoke the Exception (Arbitration Costs) in this case.

Taxation of Costs (Arbitration) on a standard basis According to O 59 r 16(3) RC, SQA is entitled to “a reasonable amount in respect of all costs reasonably incurred” by SQA in the Arbitration [Reasonable Sum (Arbitration Costs)].

I am of the view that RM500,000.00 is a Reasonable Sum (Arbitration Costs) after taking into account the following relevant considerations:

the Arbitration involved difficult questions regarding construction contracts and matters - please refer to O 59 r 16(1)(a) RC;

in the Arbitration, SQA was represented by a senior and experienced counsel, Mr. Lam Wai Loon - please see O 59 r 16(1)(b) RC;

there are many documents which have been filed for the purpose of the Arbitration - please refer to O 59 r 16(1)(c) RC;

the Arbitration was very important to SQA - please see O 59 r 16(1)(e) RC; and

the Arbitration concerned substantial amounts of claims (by LH and LY) and counterclaims (by SQA) - please refer to O 59 r 16(1)f) RC.

From the Reasonable Sum (Arbitration Costs) of RM500,000.00, this court exercises its discretion to make the following deduction:

5 Issues (Arbitration) were presented to the Arbitrator who had decided two of the 5 Issues (Arbitration) in favour of LH and LY; and

as LH and LY had succeeded at the Arbitration regarding two of the 5 Issues (Arbitration), I deduct RM200,000.00 from the Reasonable Sum (Arbitration Costs), ie., SQA is only entitled to RM300,000.00 as Costs (Arbitration).

By reason of O 59 r 24 RC, this court awards interest at the rate of 5% pa on RM300,000.00 from 6.12.2022 [date of the court’s taxation of Costs (Arbitration)], until full payment of the same. I(9). Leave of Court of Appeal is required for appeal against High

Court’s taxation of Costs (Arbitration) Before I conclude this judgment, I should point out that LH and LY have filed a notice of appeal against this court’s taxation of Costs (Arbitration) without obtaining leave of the Court of Appeal as required by s 68(1)(c) of the Courts of Judicature Act 1964 (CJA). Section 68(1)(c) CJA provides as follows: “s 68 Non-appealable matters.

No appeal shall be brought to the Court of Appeal in any of the following cases: …

where the judgment or order relates to costs only which by law are left to the discretion of the Court, except with the leave of the Court of Appeal; …” (emphasis added). J.

Outcome of 4 OS In summary -

SQA’s PO (OS No. 9) is dismissed with costs to be paid by SQA to LH and LY;

both OS No. 9 and OS No. 10 are dismissed;

OS No. 8 is allowed with the order as stated in the above paragraph 71;

as OS No. 8, OS No. 9 and OS No. 10 are heard together, one set of costs for OS No. 8, OS No. 9 and OS No. 10 shall be paid by LH and LY to SQA; and

OS No. 14 is decided in the manner as stated in the above Part I(8). WONG KIAN KHEONG Judge Court of Appeal, Malaysia Putrajaya DATE: 28 FEBRUARY 2023 Counsel for SQA: Dato’ Lim Chee Wee, Dato’ Ringo Low Kim Leng, Mr. Lam Wai Loon, Ms. Serene Hiew Mun Yi & Mr. Lim Ren Wei (Messrs Harold & Lam Partnership) Counsel for LH and LYRM: Mr. R. Thayalan A/L Retanavalu, Dato’ Dr. Abdul Shukor Bin Ahmad, Mr. Thong Chee Whei & Mr. Ee Kim Hau (Messrs K.H. EE & Partners)

Parliament has the prerogative to override Mammoth’s Vested Right/Remedy by way of Act A1569 but Parliament has not done so. This is because Parliament has not provided in Act A1569, either expressly or by necessary implication, that Act A1569 shall repeal Mammoth’s Vested Right/Remedy. In fact, there is no saving or transitional provision in Act A1569. I rely on the Federal Court’s judgment delivered by Jeffrey Tan FCJ in Tenaga Nasional Bhd v Kamarstone Sdn Bhd [2014] 2 MLJ 749, at [5] to [7], as follows - “[5] ... Still, we could take this opportunity to uphold that it is indeed a rule of construction that a statute should not be interpreted retrospectively to impair an existing right or obligation, unless such a result is unavoidable by reason of the language used in the statute (Yew Bon Tew & Anor v Kenderaan Bas Mara [1983] 1 MLJ 33 1 per Lord Brightman, delivering the advice of the Board). [6] In National Land Finance Co-operative Society Ltd v Director General of Inland Revenue [1994] 1 MLJ 99, Gunn Chit Tuan CJ (Malaya) said: On the retrospective operation of Acts, the presumption is that an enactment is not intended to have a retrospective operation unless a contrary intention appears. In this case, that presumption has been rebutted because s 1(5) of the Amendment Act states in clear terms that the amendment was intended to be retrospective. But a retrospective operation should not be given to a statute to impair an existing right and it has been stated by the UK Court of Appeal in EWP Ltd v Moore [1992] 1 All ER 880 at p 891: … Moreover, one should avoid a construction that inflicts a detriment and as Lord Brightman has said in Yew Bon Tew v Kenderaan Bas Mara [1983] 1 MLJ 1 at p 2: A statute is retrospective if it takes away or impairs a vested right acquired under existing laws, or creates a new obligation, or imposes a new duty, or attaches a new disability, in regard to events already past. [7] If it takes away a substantive right, the amendment will not have retrospective effect, save by clear and express words. If it is procedural, retrospectivity applies unless otherwise stated in the statute concerned (MGG Pillai v Tan Sri Dato' Vincent Tan Chee Yioun [2002] 2 MLJ 673 per Steve Shim CJ (Sabah & Sarawak). If the legislature intends an amendment to have retrospective application, it must expressly and clearly say so (see Puncakdana Sdn Bhd v Tribunal for Housebuyers Claims and another application [2003] 4 MLJ 9 per Md Raus J, as he then was). But retrospective effect was not manifested in the language of the amendment. Hence, the amendment to reg 11(2) must be constructed as a prospective provision without any retrospective application.” (emphasis added); and

the following two High Court cases had relied on s 30(1) IA so as to apply the previous Arbitration Act 1952 [AA (1952)] to arbitral proceedings which were commenced before the enforcement of AA -

in Putrajaya Holdings Sdn Bhd v Digital Green Sdn Bhd [2008] 7 MLJ 757, at [32], [37] and [40], Ramly Ali J (as he then was) has decided as follows - “[32] The repeal of [AA (1952)] in whole shall not affect any right or privilege acquired or accrued under [AA (1952)] or affect any legal proceedings in respect of any such right or privilege and any such legal proceedings may be instituted or continued as if [AA] had not been made. … [37] In Keith Sellar v Lee Kwang [1980] 2 MLJ 191 (FC) at p 193, Hashim Yeop A Sani J (sitting in the Federal Court) said: Generally however the right approach should be … that 'we must have regard to the trite maxim omnis nova constitution futuris forman imponere debet non praeteritis, that unless it is so expressed in the new law, a vested right is not taken away'. In the present case there is no express provision in the new [AA] to take away the vested right acquired by the defendant under the arbitration agreement and [AA

(1952)], to override the applicability s 30 [IA]. … [40] The is not meant to be applicable retrospectively. Section 51 [AA] is not an express provision to give a retrospective effect of [AA]. There is no express provisions in [AA] to give that effect. The defendant, by virtue of cl 63.5 of the arbitration agreement and s 25(2) [AA (1952)], does have an 'acquired, accrued or incurred' right to refer his dispute to the High Court. The [AA] cannot be interpreted to take away such right from him unless there are clear express provisions to that effect. There is no such express provisions in [AA].” (emphasis added); and

Putrajaya Holdings has been followed by David Wong J (as he then was) in Hiap-Taih Welding & Construction Sdn Bhd v Boustead Pelita Tinjar Sdn Bhd (formerly known as Loagan Bunut Plantations Sdn Bhd) [2008] 8 MLJ 471, at [14] to [16].” (emphasis added).