Syarikat Pembenaan Yeoh Tiong Lay v Sunway City Sdn Bhd (W-02-(C)(A)-19-01/2018)

This was an appeal by the appellant (“the defendant”) against the order of the High Court in allowing the respondent’s (“the plaintiff’s”) application to set aside the arbitration award under section 42 of the Arbitration Act 2005 (“the AA 2005”).

We had unanimously allowed the appeal. We now give our reasons.

By a letter of award dated 18.9.2007 (“the LOA”), the defendant was appointed by the plaintiff as the main contractor for the construction and completion of earthworks, piling and main building works (“the works”) of an Civil Appeal No. W-02(C)(A)-19-01/2018 3 apartment project known as Palazzion Apartment at Sri Hartamas, Kuala Lumpur.

Following the appointment, parties entered into a written building contract based on PAM form (Private Edition with Quantities) (1998 Edition) with amendments dated 2.3.2009 (“the main contract”). The LOA which forms part of the main contract provides that the works shall be completed by 21.12.2009. Under the main contract, the defendant was liable to pay liquidated and ascertained damages (LAD) for the delay in completing the works.

The relevant clauses of the main contract are clauses 27.2(vi), 27.4,

27.5 and 27.7. Clause 27.2(vi) provides: “that if the Nominated Sub-Contractor fails to complete the sub-contract works or (where the sub-contract works are to be completed in parts) any part thereof within the period specified or within any extended time granted by the Contractor with the written consent of the Architect, and the Architect certifies in writing to the Contractor that the same ought reasonably so to have been completed, the Nominated Sub-Contractor shall pay or allow to the Contractor either a sum calculated at the rate therein agreed as Liquidated and Ascertained Damages for the period during which the said works, or any part thereof, as the case may be, remain or have remained incomplete or (where no such rate had been agreed) a sum equivalent to any loss and/or damage suffered or incurred by the Contractor and caused by the failure of the Nominated Sub-Contractor aforesaid.”. [6] By clause 27.4 of the main contract, the architect may, if it is appropriate to do so, certify for the direct payment by the plaintiff to the Civil Appeal No. W-02(C)(A)-19-01/2018 4 Nominated Sub-Contractors (“NSCs”), while clause 27.5(i) of the main contract states: “If any Nominated Sub-Contractor fails to complete the sub-contract works or (where the sub-contract works are to be completed in parts) any part thereof within the time stated in the sub-contract or within any extended time granted by the Contractor, with the written approval of the Architect, then if the same ought reasonably so to have been completed, the Architect shall certify in writing accordingly; immediately upon issue the Architect shall send a duplicate of any such certificate to the Nominated Sub-Contractor.”. [7]

7.1 If the Sub-Contractor fails to complete the Sub-Contract Works or any section thereof within the specified period or an extended period or periods as hereinafter provided, he shall pay or allow to the Contractor a sum Civil Appeal No. W-02(C)(A)-19-01/2018 5 equivalent to any loss or damage suffered or incurred by the Contractor and caused by the Sub-Contractor as aforesaid. …

7.2 The Contractor shall not be entitled to claim any loss or damage under Clause 7.1 unless the Architect shall have issued to the Contractor … a certificate in writing stating that in his opinion the Sub-Contract Works or the relevant section thereof ought reasonably to have been completed within the specified period or within any extended period or periods as the case may be.”. [8] By a supplemental agreement dated 17.7.2009 entered into between the plaintiff and the defendant, (“SA No. 1”), the time for completion of the works was revised to 20.4.2010 (“the first revised completion date”) without the imposition of any penalty. The defendant however was not able to meet the first revised completion date. By this time, the defendant’s liability to pay LAD had arisen under the main contract. The defendant requested the plaintiff not to impose LAD. [9] The completion date was again revised by a supplemental agreement No. 2 dated 19.8.2010 (“SA No. 2”). By SA No. 2, the plaintiff agreed to extend the completion date to 30.10.2010 (“the second revised completion date”). And the defendant agreed to pay a compensation sum of RM11,600,000.00 to the plaintiff (“the compensation sum”). The LAD would be imposed if the defendant failed to complete the works after the second revised completion date. [10] It was the case for the defendant that the NSCs were responsible for the delays. Vide letters dated 12.4.2010 and 2.9.2010, the defendant wrote to the NSCs informing them that they had failed to complete their works on Civil Appeal No. W-02(C)(A)-19-01/2018 6 time. By these letters, the defendant had also requested the architect for the project to certify that the particular nominated sub-contract works ought reasonably to have been completed pursuant to clause 27.2(vi) of the main contract. [11] The architect refused to issue a certificate of non-completion (“CNC”)

that not only was the defendant’s work delayed, but also there was significant delay in the works by the NSCs and that the responsibility for the delay in the completion of the works ought to be borne by both the defendant and the NSCs;

(ii) that the architect ought to have acted on the defendant’s request to issue the CNC to the NSCs;

(iii) that in not issuing the CNC pursuant to clause 27.2(vi) of the main contract to the NSCs and in refusing to amend the IPCs No. 31, 32, 32R and 33 (to reflect the deductions for delay compensation) due to the NSCs, the architect had interfered with the defendant’s right of recourse against the NSCs;

(iv) that the defendant was entitled to recover any loss and/or damage suffered by the failure of the NSCs to complete the sub-contract works pursuant to clause 27.2 (vi) of the main contract and clause 7 of the nominated sub-contracts; Civil Appeal No. W-02(C)(A)-19-01/2018 9

that the NSCs had not obtained an extension of time beyond the first revised completion date;

(vi) that the documentary evidence revealed that the defendant maintained its right to seek recourse against the NSCs for the compensation sum;

(vii) that it was wrongful for the architect to invoke clause 27.4 of the main contract to effect direct payment to the NSCs given that the NSCs had not obtained extension of time and given the defendant’s right of recourse;

(viii) that the architect had failed to administer the contract in an independent and impartial manner;

(ix) that the plaintiff was in breach of its obligation to honour the IPC within the contractually stipulated period, had delayed a significant number of payments and had underpaid the defendant; and

that the defendant’s termination of the main contract was lawful and valid and that payment under IPC No. 32R was due when the notice of termination was issued. [22] The arbitrator awarded the defendant RM90,232,373.55 being the total sum for the following items (inclusive of pre-award interest):

Balance value of works executed;

(ii) Interim certificates No. 32R and 33;

(iii) Performance bond; and

(iv) Loss of profit. [23] As for the plaintiff, the arbitrator awarded a total sum of RM15,226,608.80 for remedial works, latent defects and compensation Civil Appeal No. W-02(C)(A)-19-01/2018 10 inclusive of pre-award interest. The plaintiff’s counterclaim for rectification works was dismissed. The arbitrator opined that if the works were indeed defective, the architect ought to have issued a Non-Conformance Report. [24] Pursuant to the award, the plaintiff thus had to pay the defendant RM75,005,764.75 (inclusive of pre-award interest). [25] Aggrieved, the plaintiff filed an originating summons in the High Court seeking to set aside in whole or in part and/or to vary the arbitration award pursuant to section 42 of the AA 2005. Proceedings in the High Court [26] The plaintiff contended that the arbitrator’s findings/conclusions set out above are legally flawed and that the following questions of law had arisen from the arbitration award, which the plaintiff referred to the High Court as per prayers 5-12 of the originating summons: “5. Whether as a matter of law the Plaintiff can be held responsible to the Defendant for the delays of the Nominated Sub-Contractors, which was the starting point of the Arbitrator’s chain of reasoning that led to his finding that there was a valid determination of the main contract by the Defendant, in the face of Clause 27.7 of the main contract in the form of PAM form (Private Edition with Quantities) (1998 Edition) (“Main Contract”) which provides that the responsibility of the Nominated Sub-Contractors lies with the Defendant and under no circumstances that the Plaintiff could be held liable for the same (“Question of Law No. 1”)

where the parties to a nominated sub-contract under the PAM Nominated Sub-Contract form (Private Edition with Quantities) (1998 Edition) Civil Appeal No. W-02(C)(A)-19-01/2018 11 (“Nominated Sub-Contracts”) have expressly agreed by amendment thereto, to remove the provision for liquidated and ascertained damages, and/or have not provided for the payment of the same, whether as a matter of law the Arbitrator was correct to find that

the Architect is obliged to issue a Certificate of Non-Completion in respect of the NSCs under the Main Contract, in view of the fact that it would no longer be of any consequence as a condition precedent to the recovery of liquidated damages by the Defendant from the Nominated Sub-Contractors, and

the non-issuance of the same deprived the Main Contractor of its recourse against the Nominated Sub-Contractor which were essential parts of the Arbitrator’s chain of reasoning that led to his finding that there was a valid determination of the Main Contract by the

Whether the Arbitrator was right in law in concluding that by reason of the Architect’s failure to amend Certificates 30, 31, 32R and 33 to reflect deductions for delay compensation from payments due to the Nominated Sub-Contractors, which under the Main Contract was only possible if the mechanism for recovery of liquidated damages by the Defendant from the NSCs was still operative:-

the Defendant had lost its right of recourse against the NSCs;

inferring from this and his consequent certificate of direct payment that the Architect in this instance had failed to administer the contract in an independent and impartial manner;

consequently, invalidating the Architect’s certificate of direct payment, and Civil Appeal No. W-02(C)(A)-19-01/2018 12

the Defendant’s termination of the Main Contract premised upon

(a), (b) and (c) was valid. (“Question of Law No. 3”)

Where as in the present case, the Nominated Sub-Contracts and Main Contract were designed to work together, with the Architect being the certifier in both, whether as a matter of law the suspension of the extension of time mechanism in the Main Contract by way of the Supplemental Agreements entered into by the Defendant and the Plaintiff, would similarly suspend the extension of time mechanisms in the Nominated Sub-Contracts by necessary implication or otherwise (“Question of Law No. 4”)

If so, whether a Certificate of Non-Completion could have been issued by the Architect against the Main Contractor or Nominated Sub-Contractors before the period specified for completion of works, as amended by the Supplemental Agreements, had lapsed. (“Question of Law No. 5”)

Whether as a matter of law the Arbitrator was right in holding that the Architect lacked impartiality and independence by reason that inter alia the Architect’s professional services agreement contained a stipulation whereby the Architect is required to refer to the Plaintiff for comments on all contractual matters (“Question of Law No. 6”)

Whether the Employer’s contractual right to make direct payment under the Main Contract survived the termination of the Main Contract (“Question of

Whether non-conformance reports under the terms of the Main Contract are the exclusive means of providing defects. In this regard, whether the Arbitrator is entitled to consider other evidence apart from the non-conformance reports in determining the existence of defects, liability for the same and/or quantum for rectification works. (“Question of Law No. 8”) Civil Appeal No. W-02(C)(A)-19-01/2018 13 [27] The plaintiff submitted that the arbitrator had committed the following errors of law which justifies the High Court to intervene pursuant to section 42 of the AA 2005:

in failing to recognize that the nominated sub-contracts and the main contract were designed to work together and the administration of both the main contract and the nominated sub-contracts in respect of the project cannot be treated separately and independently. The SA No. 1 and SA No. 2 by way of necessary implication apply to the nominated sub-contracts as well (Questions 4 & 5);

(ii) in failing to appreciate that as a matter of law, the defendant has no recourse to LAD under the nominated sub-contracts by reason that the provision of LAD in the nominated sub-contracts had been deliberately struck out or left empty, which means in law, the defendant is precluded from recovering any LAD from the NSCs (Questions 2 & 3);

(iii) in failing to appreciate the proper division of risk between the plaintiff and the defendant i.e. that the main contract provides that the defendant is responsible for the NSCs. The acts or breaches of the NSCs cannot be used to justify the determination of the main contract as that would tantamount to rewriting the main contract to hold the plaintiff responsible for the NSCs (Question 1); Civil Appeal No. W-02(C)(A)-19-01/2018 14

(iv) in concluding that the architect lacked impartiality and independence for the reason that the architect was required to refer all contractual matters to the plaintiff for comments (Question 6);

in failing to appreciate that the plaintiff’s contractual right to make direct payments under the main contract does not survive the determination of the main contract (Question 7);

(vi) in failing to appreciate that the non-conformance reports are not the exclusive means of proving defects (Question 8). [28] The learned judge agreed with the plaintiff on all counts. Her Ladyship held that the questions of law referred to by the plaintiff fell within the ambit of section 42 of the AA 2005 as they are questions of law that arise from the award and which substantially affect the rights of the parties. [29] The plaintiff’s application was thus allowed and the award was set aside. The matter was remitted to the arbitrator for reconsideration of the same with the learned judge’s determination on the questions of law. However, we noted that at the point when her Ladyship delivered her decision allowing the plaintiff’s application, she did not specifically answer any of the questions referred. It was only in her subsequent grounds of judgment that she answered all the questions posed. [30] On the first error submitted by the plaintiff, the learned judge ruled that if the main contract had been given an extended time line, the same must Civil Appeal No. W-02(C)(A)-19-01/2018 15 equally apply to the nominated sub-contracts. The learned judge therefore answered Question 4 in the positive and Question 5 in the negative. [31] The second error of law relates to Questions 2 and 3. The learned judge found that the arbitrator had failed to appreciate that the defendant had no right of recourse for LAD from the NSCs because the provision relating to LAD in the nominated sub-contracts had been deliberately struck out and/or left empty. This, according to the learned judge showed the intention of the parties that the LAD provision shall not apply. Consequently, the learned judge held that there was no necessity for the architect to issue the CNC, and that the arbitrator erred in law in his interpretation of the provision on LAD in the nominated sub-contracts. Questions 2 and 3 were thus answered in the negative. [32] On the third error of law which relates to Question 1, the learned judge held that the arbitrator’s finding that the defendant was justified in determining the main contract by relying on the NSCs’ delay and the non-issuance of the CNC by the architect, was contrary to clause 27.7 of the main contract, which provides that the defendant is wholly responsible for the actions of the NSCs, including the issue of delay. The arbitrator had therefore misinterpreted clause 27.7 of the main contract. Her Ladyship answered Question 1 in the negative. [33] In respect of the fourth error of law, the learned judge found that in concluding that there was unfairness on the part of the contract administrator, the arbitrator had failed to give a correct interpretation with regards to the architect’s professional services agreement. Civil Appeal No. W-02(C)(A)-19-01/2018 16 [34] The learned judge further found that the arbitrator had made an error of law in his conclusion that the plaintiff ought to have made actual payment to the NSCs, notwithstanding that the main contract had been determined. In this regard, the learned judge agreed with the plaintiff that the direct payment based on clause 27.4 of the main contract did not survive the termination of the main contract. Question 7 was thus answered in the negative. [35] The learned judge also proceeded to consider the error of law in relation to Question 8, although Question 8 had been abandoned by the parties. [36] Dissatisfied with the learned judge’s decision, the defendant appealed to this Court. [37] In gist, the defendant submitted that the application by the plaintiff was unsustainable under section 42 of the AA 2005; that the learned judge failed to specifically address and answer the questions posed and that the questions posed were fact sensitive and that there was a failure by the High Court to accept the critical findings of fact by the arbitrator. Our Decision [38] By section 8 of the AA 2005, no court shall intervene in matters governed by the AA 2005 except where so provided in the Act. One such provision which allows for the court’s intervention is section 42 which states: “42. Reference on questions of law. Civil Appeal No. W-02(C)(A)-19-01/2018 17

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.

…

…

…

…”. [39] The application of section 42 has been elucidated in many authorities. In Exceljade Sdn Bhd v Bauer (Malaysia) Sdn Bhd [2014] 1 AMR 253, Nallini J (as she then was) considered the approach to be adopted by the court in a section 42 application. Her Ladyship referred to the decision of Mustil J in The Chrysalis [1983] 1 WLR 1469 where at paragraph [17] of her judgment she said: “[17] Mustil J then goes on to consider the proper test or approach to be adopted by a court determining the substantive appeal which turns on a question of law arising out of the arbitration: Civil Appeal No. W-02(C)(A)-19-01/2018 18 … Starting therefore with the proposition that the court is concerned to decide on the hearing of the appeal whether the award can be shown to be wrong in law, how is this question to be tackled? In a case such as the present, the answer is to be found by dividing the arbitrator’s process of reasoning into three stages. (1) The arbitrator ascertain the facts. This process includes the making of findings on any facts which are in dispute.

The arbitrator ascertains the law. This process comprises not only the identification of all material rules of statute and common law, but also the identification and interpretation of the relevant parts of the contract, and the identification of those facts which must be taken into account when the decision is reached. (3) In light of the facts and the law as ascertained, the arbitrator reaches his decision. In some case, stage (3) will be purely mechanical. Once the law is correctly ascertained, the decision follows inevitably from the application of it to the facts found. In some instances, however, stage (3) involves an element of judgment on the part of the arbitrator. There is no uniquely ‘right’ answer to be derived from marrying the facts and the law, merely a choice of answers, none of which can be described as wrong. Stage (2) of the process is the proper subject matter of an appeal under the Act of 1979. In some cases an error of law can be demonstrated by studying the way in which the arbitrator has stated the law in his reasons. It is, however, also possible to infer an error of law in those cases where a correct application of the law to the facts would lead inevitably to one answer, whereas the arbitrator has arrived another; and this can be so even if the arbitrator has stated the law in his reasons in a manner which appears to be correct, for the court is then driven to assume that he did not properly understand the principle which he has stated.”. [40] In a more recent decision of the Federal Court in Far East Holdings Bhd & Anor v Majlis Ugama Islam dan Adat Istiadat Melayu Pahang & Other Civil Appeal No. W-02(C)(A)-19-01/2018 19 Appeals [2018] 1 CLJ 693, Jeffrey Tan FCJ sets out the test under section 42 as follows: “[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. 42(1A), ‘The High Court shall dismiss a reference made under sub-s (1) unless the question of law substantially affect 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. [118] An award might or might not be perverse, unconscionable, unreasonable, and the like. But it only matters when there is a question of law arising out of the award that substantially affects the rights of one or more of the parties. Under s. 42, that is the only ground for the court to intervene. Perverse, unconscionable, unreasonable and the like are not tests for the setting aside of an award. The so-called guidelines (g) ‘This jurisdiction under s. 42 is not to be lightly exercised, and should be exercised only in clear and exceptional cases’; (h) ‘Nevertheless, the court should intervene if the award is manifestly unlawful and unconscionable’; and

a question of law in relation to matters falling within (2) of Mustill J’s three stage test;

a question as to whether the decision of the tribunal was wrong (The

a question as to whether there was an error of law, and not an error of fact (Misoperi); error of law in the sense of an erroneous application of law;

a question as to whether the correct application of the law inevitably leads to one answer and the tribunal had given another (MRI Trading);

a question as to the correctness of the law applied;

a question as to the correctness of the tests applied (Canada v Southam);

a question concerning the legal effect to be given to an undisputed set of facts (Carrier Lumber);

a question as to whether the tribunal has jurisdiction to determine a particular matter (Premiums Brands); this may also come under s 37 of the

a question of construction of document (Intelek).”. [42] The Federal Court went on to state: “[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 Civil Appeal No. W-02(C)(A)-19-01/2018 21 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 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 ‘Beleares’ at pg 228) ‘… on findings of facts an arbitrator is the sole judge. … … [157] The scope of the words ‘arising out of an award’ in s. 42 was first enunciated in Majlis Amanah Rakyat v Kausar Corp, citing Universal Petroleum Co v Handels und Transport GmbH [1987] 1 WLR 1178, where Mohamad Ariff J, as he then was, said that ‘A question of law must arise out of an award and not out of the arbitration’ (followed by Rmarine Engineering (M) Sdn Bhd v Bank Islam Malaysia Bhd [2012] 10 MLJ 453; [2012] 7 CLJ 540, Sanlaiman, and Tune Insurance; see also The Arbitration Act 2005 at pp 200-201).”. [43] Reverting to the instant appeal, and applying the principles as set out in Far East Holdings Bhd (supra), we found that all the questions referred are not questions of law arising out of the award on ‘the basis of full and unqualified acceptance of the findings of fact of the arbitrator’. The questions are of mixed fact and law which called upon the court to either re-examine or re-interpret the facts or application of the law by the arbitrator. [44] Question No. 1 pertained to the issue of who bears the responsibility of the NSCs. The plaintiff contended that the arbitrator’s decision in concluding that the determination of the contract by the defendant was valid Civil Appeal No. W-02(C)(A)-19-01/2018 22 by reason that the architect had failed to issue CNC to the NSCs in effect had rendered the plaintiff responsible for the NSCs. As a matter of fact, and consonant with clause 27.7 of the main contract which stipulates that the plaintiff shall not be liable for the NSCs, the arbitrator did not find that the plaintiff was responsible for the NSCs. That the plaintiff was found responsible for the NSCs was the conclusion made by the learned judge as evident by paragraph 54 of her grounds of judgment: “3rd Error of law – Question 1 [54] On this issue, the Arbitrator made a finding that the defendant was entitled to determine the Main Contract because he finds that the NSCs were also responsible for the delay. The Arbitrator has held that the defendant was justified in determining the Main Contract by relying on the NSCs’ delay and the non-issuance of the CNC by the Architect to the NSCs. This simply means that the plaintiff as the employer is held responsible for the delays of the NSCs.” (Emphasis added) [45] Question No. 1 did not therefore arise out of the arbitration award and it cannot form the basis of a question of law to be entertained by the court under section 42. [46] In any event, based on oral and documentary evidence, the arbitrator had made a specific finding of fact that the delay in the works were attributable to both the defendant and the NSCs. The arbitrator also found that it was not disputed that both the defendant and the NSCs contributed to the delays of the works. Flowing from this undisputed fact, the architect should have issued the CNC when asked to do so by the defendant. The arbitrator made a further finding of fact that the architect failed to comply with Civil Appeal No. W-02(C)(A)-19-01/2018 23 clause 27.5 of the main contract and that this failure by the architect interfered with the defendant’s right of recourse against the NSCs. [47] In respect of Question 2, the learned judge accepted the plaintiff’s contention that the defendant and the NSCs had expressly agreed that any contractual right to LAD in the event of delay for the completion of the works was rendered inoperative by the deletion or non-entry of any terms on LAD in the appendix in the nominated sub-contracts. Consequently, the architect is not obliged, as a matter of law, to issue a CNC in respect of the NSCs under the main contract, in view of the fact that it would be of no consequence. The arbitrator therefore fell into error in concluding that the defendant had lost its valid contractual right of recourse for loss and damage against the NSCs pursuant to clause 27.2(vi) of the main contract due to the non-issuance of the CNC by the architect. [48] On the issue of absence of the provision for LAD, we found that the arbitrator had specifically referred to clause 27.2(vi) of the main contract and clause 7 of the nominated sub-contracts, where both these clauses provide for loss and/or damage for non-completion. [49] It was not disputed that the defendant had to pay RM11,600,000.00 as compensation sum to the plaintiff for the extension of time. The arbitrator made a finding of fact that the compensation sum of RM11,600,000.00 was a consideration for the second revised completion date which was undertaken outside the contractual mechanism for extension of time. Based on the documentary evidence, the arbitrator had also made a finding of fact that the defendant had maintained its right to seek recourse against the Civil Appeal No. W-02(C)(A)-19-01/2018 24 NSCs in the form of apportionment of the compensation sum. There was no interpretation of the provision for LAD by the arbitrator. [50] In respect of Questions 3 and 4, the learned judge held that the arbitrator had made an error of law in failing to interpret that both supplemental agreements apply to the nominated sub-contract because both the main contract and the nominated sub-contract were designed to work together. Therefore, if the main works had been given extension, by necessary implication the extension must equally apply to the nominated sub-contracts. [51] Again, these were not questions of law arising out of the award, but arising out of the assumption of facts implied by the learned judge which facts were not found by the arbitrator. [52] Question 3 purports to state that the termination by the defendant was on the grounds that the architect was obliged in law to issue the CNC to the NSCs; that the defendant has a right of recourse against the NSCs and that the architect was wrong to issue the certificate of direct payment. It relates to the factual findings of the arbitrator that the architect’s failure to issue the CNC frustrated the defendant’s recourse against the NSCs as without the said CNC neither damages can be claimed nor amendments to the certificates, can be made. Be that as it may, the determination of the main contract by the defendant as can be seen from the award was made pursuant to clause 26.1 for non-payment and not on the grounds set out by the plaintiff in Question 3(d). Civil Appeal No. W-02(C)(A)-19-01/2018 25 [53] In so far as Question 4 is concerned, it was premised on a disputed interpretation of facts relating to the SAs and the understanding of the recourse that the defendant had against the NSCs. The question was framed premised on the necessary implication drawn by the plaintiff and accepted by the learned judge that the extension of time granted to the defendant must equally apply to the NSCs. [54] With respect, the learned judge, upon re-assessment of that disputed interpretation of facts, was not entitled to come to an opposite conclusion from what was reached by the arbitrator. Neither was the learned judge seized with the jurisdiction to draw her own inferences from the facts before the arbitrator nor can Her Ladyship find an implication that was factually rejected by the arbitrator. More so, when as highlighted by the affidavit evidence of the defendant in the High Court, the architect and the quantity surveyor (who had testified in the arbitration) had themselves recognised in the arbitration that the purchased extension of time under SA No. 2 did not automatically extend to the NSCs. [55] On Question 5, the learned judge held that the arbitrator erred in law in concluding that a CNC ought to have been issued by the architect against the NSCs pursuant to clause 27.2 (vi) when requested by the defendant as the architect could not have issued the CNC by reason that time for completion had not lapsed. [56] Question 5 likewise was not a question of law arising out of the award. It was a hypothetical question premised on the learned judge re-examining the effect of the SAs. With respect, it was not open to the learned judge to entertain questions grounded on disputed facts or varying legal interpretation Civil Appeal No. W-02(C)(A)-19-01/2018 26 that could be given to those facts. As stated by the Federal Court in Far East Holdings Bhd (supra), the plaintiff could not refer questions of law that were wholly reliant on a reversal of facts found by the arbitrator. It is also pertinent to note that clause 8 of the nominated sub-contract provides for extension of time but this clause, as the evidence revealed, was not availed by the NSC. [57] Question 6 was in relation to the issue of the architect’s impartiality and independence. The plaintiff contended that the arbitrator had erred in law in finding that the architect lacks impartiality and independence by reason inter alia that the architect’s professional services agreement contains a stipulation whereby the architect is required to refer to the plaintiff for comments on all contractual matters. [58] While the arbitrator took cognisance of the fact that the architect’s professional services agreement with the plaintiff contains a stipulation for the architect to refer to the plaintiff for comments on all contractual matters, it was the architect’s failure to comply with clause 27.5 of the main contract and how the main contract was administered by the architect that triggered the finding of partiality. The finding was made consequent upon the arbitrator’s finding that critical nominated sub-contract works had been delayed, thereby causing overall delay of the completion of the works. The architect having known that the NSCs had not obtained an extension of time and having known that the defendant would have recourse to recover from the NSCs the loss and damage suffered for the delay, ought to have acted on the defendant’s request for the issuance of CNC. [59] The arbitrator made a specific finding of fact that the architect was partial based on his assessment of both the oral and documentary evidence. Civil Appeal No. W-02(C)(A)-19-01/2018 27 Again we found that this was a mixed question of law and fact, requiring the court to re-examine the correctness of the architect’s actions and the consequence of those actions on the defendant’s right of recourse, which question did not fall under section 42 of the AA 2005. [60] On Question 7, the plaintiff argued that the arbitrator erred in law in holding that the plaintiff’s invocation of clause 27.4 of the main contract was invalid as no actual payment was made to the NSCs. In this regard, the plaintiff asserted that upon determination of the contract, the plaintiff could no longer validly proceed with the direct payment of sums due under IPC no. 32R to the NSCs. [61] As regards direct payment by the plaintiff, on 22.9.2010 the architect issued the certificate, followed by a letter dated 23.9.2010 where the architect advised the plaintiff to make direct payment to the NSCs. It was a fact that payment under IPC No. 32R was not made to the NSCs but was placed by the plaintiff into an escrow account. The arbitrator made a finding that by clause 27.4 of the main contract, actual payment had to be made and that without actual payment to either the defendant or the NSCs, the plaintiff had obviously not honoured the IPC No. 32R. Further, given his earlier determination that the architect had wrongly effected the direct payment mechanism, the defendant was entitled to full payment of IPC No. 32R. [62] We were of the view that Question 7 likewise was not a question arising out of the award. Civil Appeal No. W-02(C)(A)-19-01/2018 28 Conclusion [63] In light of all the above, we were unanimous in our decision that the learned judge erred in finding that this was a proper case under section 42. The questions posed do not fall under section 42. On the ground that the tests under section 42(1) of the AA 2005 have not been met, we allowed the appeal with costs. We set aside the order of the High Court and we reinstated the arbitrator’s award. Dated: 28th November 2018 signed (TENGKU MAIMUN BINTI TUAN MAT) Judge Court of Appeal Counsel/Solicitors : For the Appellant: Dato’ Cyrus Das (Logan Sabapathy, Felix Dorairaj and Alithea Wong with him) Messrs. Dorairaj Low & Teh For the Respondent: Rajendra Navaratnam (Mak Hon Pan and Sachpreetraj Singh Sohanpal with him) Messrs. Azman Davidson & Co.

‘While the findings of fact and the application of legal principles by the arbitral tribunal may be wrong (in instances of findings of mixed fact and law), the court should not intervene unless the decision is perverse’, stated in Perwira Bintang are not in line with s. 42 and should not be followed.”. [41] On what is a question of law in the context of section 42, the Federal Court referred to inter alia the following cases: Vinava Shipping Co Ltd v Finelet Ag ‘The Chrysalis’ [1983] 2 All ER 658; Micoperi SrL v Shipowners’ Mutual Protection & Indemnity Association (Luxembourg) [2011] EWHC 2686 (Comm); MRI Trading AG v Erdenet Mining Corporation LLC [2012] EWHC 1988 (Comm); Canada (Director of Investigation and Research) v Southam Inc [1997] 1 SCR 748; Carrier Lumber Ltd v Joe Martin & Sons Ltd Civil Appeal No. W-02(C)(A)-19-01/2018 20 [2003] BCJ No 1602; Premiums Brands Operating GP Inc v Turner Distribution Systems Ltd [2010] BCJ No 349; Intelek Timur Sdn Bhd v Future Heritage Sdn Bhd [2004] 1 MLJ 401; [2004] 1 CLJ 743 and concluded as follows: “[150] … Nonetheless, from our survey of the authorities, we would conclude that one of the following, which is not an exhaustive list, would meet the paradigm of ‘any question of law’ in s. 42: