Taki Engineering Sdn. Bhd. v Ipoh Tower Sdn. Bhd. (W-02(C)(A)1549-09/2015)

There were 2 Originating Summonses filed in the High Court arising from the same Arbitration Award dated 10.11.2014 (the Award). The first application was vide Originating Summons No. 24C(ARB)-12-03/2015 (OS12) filed by Ipoh Tower Sdn. Bhd. (Ipoh Tower). The second was vide Originating Summons No. 24C(ARB)-3-01/2015 (OS3) filed by Taki Engineering Sdn. Bhd. (Taki).

In OS12, Ipoh Tower sought to invoke section 42 of the Arbitration Act 2005 (AA) to set aside parts of the Award, whilst in OS3 Taki sought to invoke section 38 of the AA seeking the Court’s recognition of the whole 4 Award. Both parties had agreed that Taki’s application would be treated consequentially to Ipoh Tower’s application.

The learned High Court Judge allowed in part Ipoh Tower’s application and set aside the Award in relation to paragraph 1.0 (that is, less the sum of RM 837,862.15 being Taki’s loss and expense claim and the accompanying interest), and the Award as varied was recognized and enforced as a judgment of the High Court, with costs of RM30,000.00 to be paid by Ipoh Tower to Taki.

Not happy with the said decision of the learned High Court Judge, Taki then appealed against that decision. B.

By a Letter of Award dated 24.11.2006 issued by Ipoh Tower and accepted by Taki, Taki was appointed as a contractor for a project known as “Cadangan Pindaan ke atas Pelan Bangunan Komersial 17-Tingkat yang telah diluluskan (MB1 F2/8/18/501/1996) mengandungi A) Ruang Pejabat, B) Servis Apartment, C) Club House di Atas Lot 23628, 23629 dan 30127, Jalan Dato’ Seri Ahmad Saaid, Ipoh untuk Tetuan Ipoh Tower Sdn. Bhd. and All Associated Infrastructure Works” for the contract sum of RM10,860,000.00 (the Contract).

The Date of Commencement of Work was stated to be 1.12.2006 and the Date of Completion was stated to be 31.5.2008, that is, an overall completion period of 18 months. 5

Disputes and differences arose between the parties and which were referred to arbitration pursuant to Clause 34 of the Conditions of Contract. The arbitration proceedings were presided over by the learned Arbitrator, Akbal Singh Sandhu.

The learned Arbitrator handed down the Award on 10.11.2014. That part of the Award which became the bone of contention between the parties in this appeal pertained to paragraph 1.0 (i) of the Award as follows: “1.0 The Claimant [Taki] is rightfully entitled to the due claim of the total of RM2,537,588.30 (RM837,862.15 plus RM6,692.43 minus RM48,484.40 plus RM678.80 minus RM246,721.00 plus RM1,987,560.40) being the outstanding sums of monies due under the contract from the respondent [Ipoh Tower] in the following manner:-

The Claimant is rightfully entitled to the payment of RM837,862.15 plus interest from the Respondent at the rate of five (5%) percent per annum from the date of this award until actual realisation being the amount incurred under loss and expense incurred on account of the extended period of 312 days under his application for extension of time. …” C. AT THE HIGH COURT :

In its section 42 Application, Ipoh Tower had posed 14 questions, out of which Questions 1,2,3 and 12 were dropped during submission stage, and the learned Judge held that only 3 questions on the loss of expense claim, that is, Question Nos. 9,10,11 (Loss and Expense Questions) were real questions of law within the meaning and intent of section 42 of the AA. However, the learned Judge had only determined 6 the answer to Question No. 9 in Ipoh Tower’s favour as she found it not necessary to answer Question Nos. 10 and 11 as they concern the same issue. There was no counter appeal by Ipoh Tower on the High Court decision. That being the case, we will only focus our minds on Question No. 9. Question No. 9 is as follows: “whether, on a proper and correct construction of Clause 24 of the Conditions of Contract, the undisputed fact that the Defendant has not submitted any application pursuant to Clause 24 of the Conditions of Contract will disallow the Defendant from claiming for any direct loss and/or expense under Clause 24 of the Conditions of Contract? Pursuant thereto, whether the Arbitrator could still allow any claim for direct loss and/or expense under Clause 24 of the Conditions of

Before determining Questions 9,10 and 11 as being real questions of law within the meaning of section 42 of the AA, the learned High Court Judge referred to this Court’s decision in the case of Kerajaan Malaysia v Perwira Bintang Holdings Sdn. Bhd. [2015] 2 MLRA 92 which laid down the proper tests to be applied, without intending them to be exhaustive, when considering an application under section 42 as a guide as follows: “Some Governing Principles Under Section 42 [57] On the present case-authorities, a number of propositions can be stated as guidelines. We enumerate these below, without intending them to be exhaustive, since clearly the law has to be developed further.

The question of law must be identified with sufficient precision (Taman Bandar Baru Masai Sdn Bhd v. Dindings Corporations Sdn Bhd [2009] 4 MLRH 171; Maimunah Deraman v. Majlis Perbandaran Kemaman (supra);

The grounds in support must also be stated on the same basis; 7

The question of law must arise from the award, not the arbitration proceeding generally (Majlis Amanah Rakyat v. Kausar Corporation Sdn Bhd (supra), Exceljade Sdn Bhd v. Bauer (Malaysia) Sdn Bhd (supra));

The party referring the question of law must satisfy the court that a determination of the question of law will substantially affect his rights;

The question of law must be legitimate question of law, and not a question of fact “dressed up” as a question of law (Georgas SA v. Trammo Gas Ltd (The Belarus) [1993] 1 Lloyd’s Res 215);

The court must dismiss the reference if a determination of the question of law will not have a substantial effect on the rights of parties (Exceljade Sdn Bhd v. Bauer (Malaysia) Sdn Bhd (supra));

This jurisdiction under s 42 is not to be lightly exercised, and should be exercised only in clear and exceptional cases (Lembaga Kemajuan Ikan Malaysia v. WJ Construction Sdn

Nevertheless, the court should intervene if the award is manifestly unlawful and unconscionable;

The arbitral tribunal remains the sole determiners of questions of fact and evidence (Gold and Resource Development (NZ) Ltd v. Doug Hood Limited [2000] 3 NZLR 318);

While the findings of facts 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.”

The learned High Court Judge then held as follows in regard to the other Questions posed (other than Questions 9,10 and 11): “[74] However, from the questions posed, I must say that, to a large extent, I agree with the submissions of Taki. The questions identified are more properly raised if the matter before the Court is in the nature of an appeal, which it obviously is not. There are so many findings of fact involved here which the Court must decline to intervene. Even on the matter of costs, that is very much a matter of discretion and I see no reason to intervene. There is also section 8 of the Arbitration Act 2005 which reminds the Court of its jurisdiction in arbitration matters. Moreover, the Courts have, on its own 8 volition, always adopted a policy of minimum intervention, especially in matters relating to findings of fact given that the arbitrators are the masters here. [75] Save for the questions on the issue of Taki's claim for loss and expense, especially question 9, I do not find any of the questions proper questions of law within the meaning and intent of section 42. There are no errors of law on these various issues that are apparent on the face of the award. The reasoning subscribed by the learned Arbitrator on the matter of delay, extensions of time, LAD, and omissions are not bizarre, illogical or incomprehensible to the extent that they are not countenanced in law. The questions involve substantially findings of fact and are quite clearly outside the purview of section 42. In fact, most of these questions are actually questions of mixed fact and law. In many of the instances, I agree with Taki that the Arbitrator did not say or conclude in the manner as claimed by Ipoh Tower. Hence, there is merit in the argument that the exercise would be academic.”

As for Question 9, this is what the learned High Court Judge had to say – “[83] With regard to these questions, I must agree with the submissions of learned counsel for Ipoh Tower. It is my opinion, particularly in respect of the first part of Question 9, that this is indeed a question of law, requiring the determination of this Court. This question concerns the appropriate and applicable principle in interpretation and construction of contracts, including how notice requirements are to be understood or treated. Taki's claim for the loss and expense claim is pivoted on clause 24…”

The learned High Court Judge then went on to consider the provisions of Clause 24, which provides as follows : “24.0. Loss And/Or Expense Caused By Disturbance Of Regular Progress

24.1. If and when the Contractor notifies the Architect in writing that the regular progress of the Works or any part of it has been or is likely to be materially affected and that he had incurred or is likely to incur direct loss and/or expense for which he would not be reimbursed by a payment under any other provision of this Contract then the Architect or the Quantity Surveyor as instructed by the Architect shall as and when necessary from time to time ascertain 9 the amount of such loss and/or expense which had been incurred by the Contractor, provided that:

24.1.(i) The Contractor's application is made in writing as soon as it becomes or should be reasonably apparent to him that the regular progress of the Works or any part of it had been or is likely to be affected; and 24.1.(ii) The Contractor submits together with his application relevant information substantiating his claim so as to enable the Architect or the Quantity Surveyor as instructed by the Architect to form an opinion; and 24.1.(iii) The Contractor upon request submit to the Architect or the Quantity Surveyor as instructed by the Architect any other additional details of loss and/or expense as are reasonably necessary for ascertainment.

24.2. The Contractor is not entitled to loss and/or expense except in accordance with the express provisions of the Contract. The following are circumstances materially affecting the regular progress of the Works referred to in Clause 24.1:

24.2.(i) The Contractor not having received in due time the necessary instructions, drawings, details or levels from the Architect for which he had specifically applied in writing provided that such application was made on a date which having regard to the Date for Completion stated in the Appendix or any extension of time under Clause 23.0 or sub-clause 32.1 (iii) was neither unreasonably distant from not unreasonably close to the date on which it was necessary for him to receive them.

24.2.(ii) The opening up for inspection of any work covered up or testing of any work, materials or goods in accordance with Clause 6.3, including making good in consequence of such opening up or testing, unless the inspection or test showed that the work, materials or goods were not in accordance with this Contract.

24.2.(iii) Any discrepancy in or divergence between the Contract Drawings and/or the Contract Bills.

24.2.(iv) Delay on the part of artists, tradesmen, or others engaged by the Employer in executing work not forming part of this Contract.

24.2.(v) The Architect's instructions issued in regard to the postponement of any work to be executed under the provisions of this Contract. 10

24.2.(vi) Delay or failure by the Employer to supply or provide materials and goods which the Employer had agreed to provide or supply for the Work.

24.2.(vii) Failure of the Employer to give in due time entry to or exit from the site of the Works or any part thereof through or over any land by way of passage adjoining or connected to the site and in the possession and control of the Employer in accordance with the Contract Drawings and/or the Contract Bills.

24.2.(viii) Any act of prevention or breach of contract by the Employer.

24.3. If and when the Contractor makes written application within a reasonable time of it becoming apparent that the progress of the Work or any part of it has been affected as aforesaid, then the Architect or the Quantity Surveyor as instructed by the Architect shall ascertain the amount of such loss and/or expense. The failure by the Contractor to comply with the requirements of Clause 24.0 shall entitle the Architect or the Quantity Surveyor as instructed by the Architect to ascertain the quantum of such loss and/or expense on the basis of information available to them. 24[4] Any amount so ascertained from time to time shall be added to the Contract Sum, and if an Interim Certificate is issued after the date of ascertainment any such amount shall be added to the amount which would otherwise be stated as due in such Certificate.” [Emphasis added]

The learned High Court Judge then made the following findings : “[85] It is clear from clause 24 that the right to claim and to be compensated for direct loss and expense is subject to certain conditions precedent. Those conditions are clearly set out in clause 24 itself and they include the requirement of a notification or a written application. The application is vital and must first be made as it triggers the operation and invocation of this clause. Without the application, it may be said that there is no corresponding obligation to consider the claim. This in effect is the plain and clear meaning of clause 24.2 which provides that Taki is not entitled to loss and/or expense except in accordance with the express provisions of the contract. [86] The timing of the notification and application is equally important according to the terms of clause 24. Clause 24 requires the written 11 application to be sent as soon as it becomes or should be reasonably apparent to Taki that the regular progress of the works or any part of the works will become materially affected and that Taki has either incurred or is likely to incur direct loss and expense. When such a direct loss and expense claim is applied for, the Architect is then required to ascertain the amount of loss and expense, from time to time. [87] The claim is furthermore not available unless the circumstances affecting the regular progress of the works are material circumstances. What falls within the meaning of "material circumstances" is defined in clause 24.2. All these factors which are clearly expressed in clause 24 have been ignored by the learned Arbitrator in our present case. That goes against the basic tenets of construction of contracts. [88] In my view, the learned Arbitrator is obliged to construe the terms and conditions of the contract as agreed between the parties. By clause 24, the parties had agreed that a loss and expense claim may be made. But, the parties had further expressly agreed that for such a claim to be proper and valid, a written notice or application must first be made. When this and other prerequisites have been met, it is then open to the Architect as to how he would exercise his discretion on evaluating the claim. [89] The facts and circumstances of the present case are even worse when compared to those in Trikkon Construction. Taki did not reserve its right to claim under clause 24. In fact, Taki deliberately did not make any claim at the material time because the number of days involved were minimal. Taki had consciously decided not to make any claim for loss and expense under clause 24. While that may have been the reason for not pursuing the claim at the relevant time, this does not detract from the contractual requirements of notice. Furthermore, it is not open to the Arbitrator to dispense with the notice requirements because of how he had perceived the Architect's execution of his responsibilities when there are these express terms in clause 24; and when Taki had made this deliberate choice of not claiming for loss and expense or the material time. Clause 24 does not permit the dispensation of notice, neither do any of the other provisions. [90] The learned Arbitrator appears to have dealt with the issue of the prerequisites in clause 24 by reference to the Architect's conduct in respect of the EOT applications. With respect, the conduct of the Architect and how he had determined the EOT applications had nothing to do with the written application requirements of clause 24, especially clause 24.1. That conduct, if at all, would only be relevant in examining the exercise of discretion and not in the triggering or the operation of this clause. Until the 12 written application and claim is properly made according to the express terms of clause 24, that exercise does not come under scrutiny.”

The learned High Court Judge, in deciding in favour of Ipoh Tower, then came to the following conclusions : “[95] The learned Arbitrator considered the Architect's conduct as a relevant factor under clause 24. With respect, that is incorrect and would amount to rewriting the terms of the contract. The arbitration and also these Court proceedings are not forums to rewrite any term of any contract. I agree with learned counsel for Ipoh Tower that the approach and interpretation of clause 24 as ascribed by the learned Arbitrator is not one that is countenanced in law and it goes against the principles of construction. Hence, the learned Arbitrator had completely misdirected himself on the law on the construction of clause 24. This misdirection certainly constitutes an error of law which arises in the Award within the meaning and intent of section 42 of the Arbitration Act 2005. Further, I accept that this question of law substantially affects the rights of Ipoh Tower. Certainly the decision here substantially affects the Award in monetary terms. [96] Consequently, the answer to the first part of Question 9 is in the affirmative; and the answer to the second part of Question 9 is in the negative. With these deliberations and determination of Question 9, I do not feel it necessary to answer the other questions on this same issue given that they really concern the same.” D.

The sole issue before us was whether or not the learned Arbitrator’s interpretation of a clause in the Contract (namely Clause 24) amounted to a question of law? Before answering this question, it is instructive to refer to the arbitration clause in the Contract, that is Clause 34, of which the relevant parts are as follows: “34.0 Arbitration 34.1 In the event that any dispute or difference arises between the Employer, or the Architect on his behalf, and the Contractor, either 13 during the progress or after completion or abandonment of the Works regarding:

34.1(i) Any matter or thing of whatsoever nature arising there under or in connection therewith, including any matter or thing left by this Contract to the discretion of the Architect; or 34.1(ii) The withholding by the Architect of any certificate to which the Contractor may claim to be entitled to; or 34.1(iii) The measurement and valuation in sub-clause 30.5(i); or 34.1(iv) The rights and liabilities of the parties under Clauses 25.0,26.0, 31.0 or 32.0; or 34.1(v) The unreasonable withholding of consent or agreement by the Employer or the Architect on his behalf or by the Contractor, Then such disputes or differences shall be referred to arbitration. …

34.4 The Arbitrator shall, without prejudice to the generally of his powers, have power:

34.4(i) To rectify the Contractor so that it accurately reflects the true agreement made by the Employer and the

34.4(ii) To direct such measurements and/or valuations as may in his opinion be desirable in order to determine the rights of the parties;

34.4(iii) To ascertain and award any sum which ought to have been the subject of or included in any certificate; and 34.4(iv) To open up, review and revise any certificate, opinion, decision, requirement, or notice; and 34.4 (v) To determine all matters in dispute submitted to him in the same manner as if no such certificate, opinion, decision, requirement or notice had been given; 14

34.4(vi) To award interest from such dates at such rates and with such rests as he thinks fit :

On the whole or part of any amount awarded by him in respect of any period up to the date of the award;

On the whole or part of any amount claimed in the arbitration and outstanding at the commencement of the arbitral proceedings but paid before the award was made in respect of any period up to the date of payment [;]

34.4 (vii) To award interest from the date of the award (or any later date) until payment, at such rates and with such rests as he thinks fit on the outstanding amount of any award. …

34.6 The award of such Arbitrator shall be final and binding on the parties.”

It was argued by Taki that the parties had entered into a contract which contained a comprehensive arbitration clause as in Clause 34 of the Conditions of Contract. That based on the parties’ pleadings, it was wrong for the learned Judge to hold that Taki’s claim for increased preliminaries was a claim under Clause 24 of the Conditions of Contract and that the alleged threshold requirements of Clause 24 were not complied with. This was because the learned Judge had failed to see that based on the said terms of the arbitration agreement, especially paragraphs 34.4(iii), (iv) and (v), it was well within the jurisdiction of the learned Arbitrator to decide on it, even without the Architect having considered it, or forming an opinion on it. It was therefore submitted by Taki that Ipoh Tower, by way of its pleadings, had categorized this as a “loss and expense” Clause 24 of the Conditions of Contract and had thus 15 agreed for this claim and the interpretation of Clause 24 (being a question of law) to be put before the Arbitral Tribunal as a specific reference for the Tribunal’s determination. Further, Taki’s claim for increased preliminaries consequential on a claim for extension of time (EOT) was a claim under common law and the Contracts Act 1950, was not necessarily a claim for loss and expense under Clause 24 of the Conditions of Contract and that the learned Arbitrator was justified in the circumstances to treat it as such.

In order to follow Taki’s argument on the parties’ pleadings we reproduce the salient parts of the parties’ pleadings as follows:

18.1 Taki pleaded thus in its Points of Claim – “ 23. The Claimant is justifiably entitled to 386 days extension of time if the Plaintiff’s applications for the extensions of time were to have been properly evaluated by the Architect based on the reasons and the sound bases supporting such applications.

Pursuant thereto, the Claimant is entitled to claim for Loss and Expense incurred due to increased preliminaries as a direct consequence of the total extension of time required to complete the Works (ie 386 days). The details as summarized in Table A annexed hereto. …

Wherefore, the Claimant claims against the Respondent the following:

……….;

……….;

loss and expense due to increased preliminaries amounting to RM1,036,585.87 incurred by the Claimant as a consequence of the Extension of Time which the Claimant was entitled to but the Architect refused to grant…” 16

18.2 Ipoh Tower’s Defence was – “ 23. Paragraph 24 of the Points of Claim is denied and the Claimant is put to strict proof thereof. The Claimant is not entitled to any loss and expense.

The Claimant has failed to comply with clause 24 of the Conditions of Contract. Among other failures:

the Claimant had not submitted any claim for loss and expense as required under the said clause;

(ii) even if there was any such claim submitted (which is denied), such submission was not in accordance with the requirements under clause 24 of the Conditions of Contract;

(iii) the events relied on by the Claimant in applying for extension of time are events constituting variation works which have already been fully compensated or reimbursed as payment for variation works;

(iv) the events relied on by the Claimant are not within sub-clauses 24.2(i) to (viii) of the Conditions of Contract; and

in any event, there was no causal link between the events relied on by the Claimant and the loss and expense that it is claiming now.

At all material times, even up to the latest claim submitted by the Claimant prior to this proceedings, the Claimant had not submitted any claim for loss and expense.

In any event, the amount claimed by the Claimant is exorbitant and disproportionate. ”

18.3 Taki in its Reply to Ipoh Tower’s Defence averred thus – “ 9.0 In reply to paragraph 23 of the Defence, the Claimant contends that as a direct consequence of the extension of time, which the Architect 17 ought to have approved, the Respondent ought to be aware that the Claimant was or would be entitled to such claim for loss and expense provided for under the Contract. In the circumstances the Claimant denies all averments to the contrary in paragraph 23 of the Defence. ”

18.4 Ipoh Tower in its Reply to Defence to Counterclaim stated this – “ 9. Paragraph 9.0 of the Claimant’s Reply to Defence is denied. No such knowledge could be imposed onto the Respondent especially in view of the Claimant’s failure as pleaded in Paragraph 23 of the Defence.”

We generally agreed with Taki’s submission. In the first place, the issue of interpretation of Clause 24 of the Conditions of Contract can be said to have been specifically pleaded by the parties to be determined by the learned Arbitrator as seen in the above quotations. As such we were of the view that one of the cornerstone of arbitral proceedings, being party autonomy, must not be ignored in the name of overarching judicial powers of the Courts. For to do otherwise will lead us down a slippery slope of the arbitral proceedings being put into disrepute and in that process the “many” advantages being touted for the arbitral proceedings would be negated, and the many “disadvantages” of the judicial process would once again be resurrected to nobody’s gain.

We found that the learned Arbitrator was well within his jurisdiction to rule on the interpretation of Clause 24. Below is what the learned Arbitrator found on the Issues of Loss and Expense – “3.0

3.01 I find that the respondent had contended that the claimant is not entitled to the claim of loss and expense for reasons that the claimant did not make any requests as per the Clause requirements in the PAM Form. I also find that this line of 18 argument will hold if the architect as the respondent’s representative had himself acted or performed his duty diligently in compliance with the entire requirements under Clause 24.0 as indeed I have found earlier that he had not dispensed information that was within his own knowledge and understanding which information had materially affected the regular progress of work.

3.02 I find that the Claimant had claimed for loss and expense for an EOT of 328 days in his points of claim based on his EOT application of 328 days, however revised it to 312 days in his submission based on the testimony of his witness.

3.03 I have found earlier that the completion date was rendered ‘at large’ as a result of the discrepancies caused by the architect/respondent in the assessments of the claimant’s EOT applications and his un-professional assessments had also further nullified the respondents claims towards LAD penalty. The rendering of the contract time ‘at large’ has therefore given rise to the allowance of claim in favour of the claimant on account of his losses towards loss and expense incurred in the increased preliminaries in order for the claimant to complete the works.

3.04 I therefore find and hold that the revised amount of RM837,862.15 claimed by the claimant on account for his extended period requiring 312 days to be in order and the respondent is therefore liable to pay this amount to the claimant.

3.05 The claimant has also claimed for his entitlement towards loss and expense on account of under certification caused by the architect in his certificates of payments Nos. 2,5,6 and 7. In the assessments of such claims of underpayment to the claimant on account of progress claims, it is necessary for the respondent and the architect to apprehend the reality of ensuring the smooth flow of funds towards payments of the certificates so as not to burden the claimant/contractor. The contract does not stipulate a requirement for the claimant/contractor to finance the works and get paid later safe for the time period required for honouring of payment certificates.

3.06 I also find that in the issuance of all the afore mentioned certificates the architect had stretched his powers in the allowable retention sums stipulated in the contract, the retention of which 19 sums resulted in materially affecting the claimant’s ability to finance his works on site and I therefore find and hold that the claimant is entitled to the claim of his losses under loss and expense on account of under certification of the interim certificates of payments Nos. 2,5,6 and 7 by the architect and which claim amounts to RM6,692.43 and the respondent is therefore liable to pay this amount to the claimant.” [Emphasis added]

Secondly, having ruled on the interpretation of Clause 24, based on the facts of the case as found by the learned Arbitrator, we found that Question 9 could not be said to be purely a question of law in the first place. We were of the view that Question 9 was actually a question of fact dressed up as a question of law. That being the case, the learned High Court Judge had erred when she found Question 9 to be purely a question of law and proceeded to rule on the issue and set aside the part of the learned Arbitrator’s Award.

We agreed with Taki’s submission that the learned High Court Judge had erred when she failed to appreciate that Taki’s claim for increased preliminaries was a question of fact consequent on a factual determination on whether Taki was entitled to EOT. When the learned Arbitrator found that in the circumstances of the case, time was set “at large”, the learned Arbitrator was justified to allow Taki’s claim for increased preliminaries since –

22.1 it was a natural consequence of the learned Arbitrator’s finding of fact that time for completion had been rendered at large under the

22.2 such contractual claim could not have been made by Taki before the determination by the learned Arbitrator of the proper allowable EOT for completion; 20

22.3 the finding of fact on the quantum of loss and expense incurred due to increased preliminaries had been proven and accepted by the learned Arbitrator as valid.

Thirdly, we would like to echo the words of Syed Agil Barakbah SCJ (as he then was) in the Supreme Court case of Ganda Edible Oils Sdn. Bhd. v Transgrain B.V. [1987] 1 MLRA 235, at page 239, on party autonomy as follows: “If a specific question of law is submitted to the arbitrator for his decision and he decides it, the fact that the decision is erroneous does not make the award bad on its face so as to permit its being set aside; and where the question referred for arbitration is a question of construction, which is generally speaking, a question of law, the arbitrator’s decision cannot be set aside only because the Court would itself have come to a different conclusion; but if it appears on the face of the award that the arbitrator has proceeded illegally, as, for instance, by deciding on evidence which was not admissible, or on principles of construction which the law does not countenance, there is error in law which may be ground for setting aside the award.” (Halsbury’s Laws of England, 4th Edn., vol 2, p.334 para.623 “Error of law on face of award”).

This Court, in the case of Petronas Penapisan (Melaka) Sdn. Bhd. v Ahmani Sdn. Bhd. [2016] 2 MLRA 407, per Hamid Sultan Abu Backer JCA, at page 428, paragraph 35, had explained on the present regime of the AA, as opposed to the earlier regime of the Arbitration Act 1952, in regard to party autonomy concept under the Model Law which Malaysia had adopted in the form of the AA (with modifications), as follows: “[35] It must be noted that the above principles are largely related to the old regime. The old regime does not advocate party autonomy concept and/or confidentiality doctrine, at the expense of court intervention. The previous sections 23 and 24 or its equivalent in England and the case 21 laws arising from therein has been the cornerstone for Malaysian courts for deciding an application under section 42. Even under the previous regime, the test to remit the award and/or set aside was very strict, notwithstanding the previous regime was largely based on the concept of ‘court knows best’ as opposed to the new regime under the model law which advocates ‘the arbitrator knows best’ and the court is obliged to respect party autonomy concept as well as the confidentiality concept. In relation to the confidentiality concept, courts are obliged to take cognisance of the fact that disclosures of the facts of the case to impinge the award will impinge the confidentiality concept as well as the party autonomy concept to reach finality. In consequence, the courts are obliged to show deference to the spirit and intent of the Model Law 1985 which has been subsumed in AA 2005 to a large extent.” The same learned Court of Appeal Judge, at paragraph 38, stated as follows, of which we agree : “[38] Having said the above, in dealing with s 42, the court must ensure that the court process is not abused and that the party autonomy concept as well as the principle relating to finality of award is respected. To enable the court to ensure that the court process is not abused, the section as well as case laws provides clear guidelines.”

Along the same vein, this Court in, Kerajaan Malaysia v Perwira Bintang Holdings Sdn. Bhd. (supra), per Mohamad Ariff JCA (as he then was), delivering the judgment of the Court, at page 141, paragraph 39, had stated as follows: “ [39]…In as much as our courts must embrace the principles of finalty of awards, party autonomy and minimal court intervention in the context of the Model Law legal regime, and the more general considerations that our courts should be [sic] arbitration-friendly and pro-enforcement, we cannot allow an award to stand in the face of a clear excess of jurisdiction and a breach of the equally important principle that arbitration proceeding is consensual and the mandate of the chosen arbitrator has to be limited to the terms of the submissions and the agreed issues...”

In the Federal Court case of The Government of India v Cairn Energy India Pty Ltd & Anor [2011] 6 MLJ 441, per Richard Malanjum 22 CJ (Sabah and Sarawak) (as he then was) (delivering the judgment of the court), at page 462, paragraphs 52,53, held as follows: “ [52] We note that the Arbitrators were faced with a question on the construction of a clause in an agreement. From the reading of it, no doubt it could be given two interpretations – one in favour of the Appellant and one in favour of the Respondents. For that very reason, the matter was sent for arbitration. The fact that the learned majority arbitrators took one approach in interpretation (which was in favour of the respondents) over the other cannot be a ground for challenge. [53] And as Scrutton LJ put it “…if you refer a matter expressly to the arbitrator and he makes an error of law you must take the consequences; you have gone to an arbitrator and if the arbitrator whom you choose makes a mistake in law that is your look-out for choosing the wrong arbitrator; if you choose to go to Caesar you must take Caesar’s judgment.’ (See African & Eastern (Malaya), Ltd v White, Palmer & Co. Ltd (1930) 36 Ll L REP 113; cited with approval by the Court of Appeal in Dato’ Teong Teck Kim & Ors v Dato’ Teong Teck Leng [1996] 1 MLJ 178; [1996] 2 CLJ 249).” [Emphasis added.]

Fourthly, following what we have stated before this, it must be remembered that the parties contracted that the Award of the learned Arbitrator shall be final and binding on the parties – see Clause 34.6 of the Conditions of Contract. Clause 34.6 is also reflected in subsection 36(1) of the AA.

Fifthly, although Ipoh Tower had submitted that the AA had made specific provisions, namely section 42, to enable it to make such an application to the Court and for the Court to decide on the matter, we also noted that section 30 of the AA (before it was amended by the Arbitration (Amendment) (No.2) Act 2018) provides as follows: 23 “Law applicable to substance of dispute

30.(1) Unless otherwise agreed by the parties, in respect of a domestic arbitration where the seat of arbitration is in Malaysia, the arbitral tribunal shall decide the dispute in accordance with the substantive law of Malaysia. …

The arbitral tribunal shall, in all cases, decide in accordance with the terms of the agreement and shall take into account the usages of the trade applicable to the transaction.” E. CONCLUSION :

For all the above reasons and with respect, we were of the view that the High Court should not have intervened with the learned Arbitrator’s Award. We therefore unanimously allowed Taki’s appeal and set aside the High Court order dated 14.8.2015. We further ordered that the learned Arbitrator’s Award be reinstated. We awarded costs to be paid by Ipoh Tower to Taki at RM10,000.00 subject to the payment of allocatur fees. We also ordered the deposit to be refunded to Taki. sgd (UMI KALTHUM BINTI ABDUL MAJID) Judge Court of Appeal Malaysia Putrajaya Dated: 29.01.2019 24 Counsels/Solicitors For the Appellant: James Edwin Pushparatnam Colin Victor George (Tetuan James Edwin & Co.) For the Respondent: H.L. Choon Melody Leong (Tetuan Raja Darryl & Loh)