Virgin Management Sdn Bhd v Z & Z Bina Sdn Bhd (WA-24C(ARB)-34-08/2023)

1.1 From dealing with all matters for the subject matter of the JVA being 9 units of 3 storey shop office, 1 unit of four storey shop office and 1 unit of four storey shop office;

1.2 From selling, parting with, encumbering by way of security or otherwise interfering with any tenancies, charging, mortgaging, assigning, pledging, transferring, dealing, dissipating, disposing, removing, diminishing or tenanting 2 units of three storey shop office at No. 5 and 9 Jalan Cemperai 1A, Kampung Baru Pandan, 81100 Johor Bahru, Johor; and 1.3 For the Defendant to be made accountable for all monies received from the said Project and delivery of the project accounts together with all supporting documents pending arbitration proceedings pursuant to section 11 of the Arbitration Act 2005. [2] It is the Plaintiff’s position that the Defendant had assigned all its right in the Project to the Plaintiff (Assignment) pending the outcome of the Arbitration proceedings arising from a dispute between them. [3] The Plaintiff submits that the Defendant has continued to deal with the Project although the Defendant has no rights whatsoever and is acting in breach of the Assignment. Background Facts [4] The Plaintiff (an Investor) is the Assignee of all the interest in the JVA. [5] The Defendant (the Developer) is the Assignor of the JVA. [6] Defendant entered a joint venture agreement with Myacres Development Sdn Bhd (“Myacres”), the landowner nominee, to develop a piece of property known as Pajakan Negeri No: Hakmilik 50464, Lot 4531, Mukim Tebrau, Daerah Johor Bahru dan Negeri Johor Darul Takzim (“Project”). [7] The Defendant did not have any financial capability to enter into the JVA and sought the assistance of the Plaintiff’s predecessor to provide a financial injection of RM400,000.00 to enable the Defendant to execute the JVA with Myacres. [8] The Plaintiff’s predecessor agreed to provide the said financial assistance of RM400,000.00 in accordance with the terms of the Deed of Assignment cum Profit sharing agreement dated 25th March 2011. [9] By virtue of a Deed of Assignment dated 25th March 2011 the Defendant and the Plaintiff agreed on the following key material terms: a) In consideration of the sum of RM400,000.00 (Ringgit Malaysia Four Hundred Thousand Only) (hereinafter referred to as “the Investment Sum”) which shall be the sum of cash consideration contributed by the Assignee towards the said Project in the manner as provided thereunder, the Assignor (Defendant) assigned, transferred and conveyed to the Assignee (Plaintiff) all rights and interests vested in the Assignor by, under or pursuant to the JVA. b) the parties expressly agreed and confirmed with each other that subject only to the express terms and modifications therein contained, the Assignee (Plaintiff) was to assume all and sundry the obligations and liabilities and shall be entitled to all whatsoever benefits right title and interest imposed upon or vested in the Assignor by, under or pursuant to the JVA as fully and effectually as if the Assignee has been a party to the JVA in place of the Assignor and each of the parties thereto severally covenanted and undertook to do all acts and execute all instruments necessary or expedient for the purpose of effecting the stipulations therein. c) Time wherever mentioned shall be deemed to be the essence of this Assignment. d) The Assignment was to be binding upon the respective heirs, representative and assigns of the parties thereto. e) In the event of any dispute arising between the parties thereto which cannot be mutually resolved within a reasonable time, the same shall be referred to the Arbitration. [10] The Plaintiff in turn received its right and obligations from Virgin Properties Sdn Bhd (“VPSB”) based on a Deed of Assignment and Irrevocable Power of Attorney dated 15 November 2017. [11] In return the Defendant having assigned all its rights towards the said JVA to the Plaintiff, the Defendant was to have no rights and interest to deal in the right and benefit of the JVA in whatever way or in any manner whatsoever after 25th March 2011 without the consent of the Plaintiff. [12] However, after the assignment, the Defendant had allagedly in breach of the Assignment Agreement went on to receive multiple payments totalling from respective purchasers especially from purchasers of Unit 2, 7, 9, 10 and 11 amounting to a sum of approximately RM3,200,000.00. [13] The Defendant was allegedly supposed to transfer the said amounts to the Stakeholder Solicitors for the purposes of the Project but failed to do so. The Defendant thereinafter informed the Plaintiff that they will provide an account for the said amounts but none had been received. [14] Due to project failures in 2014 and the said appointed main contractors having abandoned the site, the Plaintiff sought the appointment of a new contractor. [15] The Plaintiff went to cause the Defendant to appoint Superbtech Construction Sdn Bhd on 10.12.2014, the Main Contractor, wherein at clause 5 the said material term it was agreed. “Our client (ZZ Bina Sdn Bhd) will hereinfafter forward all monies paid towards the project from the purchasers to be kept in our clients account in order to make final payment of RM2,348,334.50 to your goodself upon completion of the said works and the issuance of the certificate of Practical completion by the architect…” [16] Despite this agreement to transfer all monies received to the Stakeholder Solicitor client account, the Defendant had allegedly only transferred a portion of the monies and held on to the balance sums in breach of all the agreements. [17] The Defendant did not forward the full payments received and only forwarded RM1,083,000.00 to the Solicitors Client account for the benefit of the said Project. [18] Allegedly due to the Defendant’s failure to make the full payment, the development of the said project failed on multiple occasions. Due to the failure of the said Project, the Plaintiff had made a further payment of RM2,351,166.64 over and above the initial agreed RM400,000.00

security for costs;

discovery of documents and interrogatories;

giving of evidence by affidavit;

appointment of a receiver;

securing the amount in dispute, whether by way of arrest of property or bail or other security pursuant to the admiralty jurisdiction of the High Court; [Am. by act A1395]

the preservation, interim custody or sale of any property which is the subject-matter of the dispute;

ensuring that any award which may be made in the arbitral proceedings is not rendered ineffectual by the dissipation of assets by a party; and

an interim injunction or any other interim measure.” [35] It is trite that an injunction is an equitable remedy and the plaintiff must thus come to court with clean hands, see the Federal Court in Ng Hiok Seng @ Ang Yeok Seng v Yim Yut Kiu (Personal representative of the estate of Chan Weng Sun, deceased) [1997] 2 MLJ 45 which was applied in CBM Construction Sdn Bhd v Builtcon And Development Sdn Bhd & Anor [1999] 2 MLJ 368. [36] The Plaintiff on the other hand submits that these are new issues raised by the Defendant as it has been 8 years since agreeing to the Assignment and they have now only raised this issue of the validity of the assignment for the 1st time. [37] In coming to my decision on this issue, I have had to consider the Federal Court case of Press Metal Sarawak Sdn Bhd v Etiqa Takaful Bhd [2015] 4 CLJ 734 where the Federal Court has decided that: “…the modern view (in line with the basic principles of the English law of freedom of contract and indeed international conventions) is that there is no good reason why the courts should strive to take matters out of the hands of the tribunal into which the parties have by agreement undertaken to place them.” [38] I am of the view that the dispute between the parties i.e the alleged breach of the assignment and the Defendant allegedly taking matters into its own hands in dealing with certain units in the Project herein is firstly within the jurisdiction of the arbitral tribunal. [39] I further hold that the disputes should thus be litigated in the said tribunal. Any attempt to have this Court decide on any issues which comes within the jurisdiction of the tribunal to determine this dispute will go against the spirit and intent of the Arbitration Contract. In coming to my decision, I have also considered the fact that there has been no evidence produced before this Court that the Defendant has objected in any way to the Notice to Arbitrate dated 15.8.2023 which was sent to the Defendant. [40] As the Arbitration Agreement was executed in 2011 and the Defendant have themselves admitted to this agreement, the Arbitration must be allowed to proceed to decide unhindered any issues of fact and dispute between the parties, and without any such issues being determined by this Court as to the facts or otherwise. [41] I must categorically state that the issues of the Plaintiff’s instances of alleged collusion, deception and fraudulent conduct amongst others as contended by the Defendant, to which I had looked at, are with respect, matters which should be decided by the Arbitral tribunal and not this Court, as any attempt to do so may also pre determine issues or facts which are well within the domain of the said Tribunal. [42] I will now address the Plaintiff’s grounds in support of the Injunction herein but I must make it clear that this Court is not deciding on the merits of the claim but only on whether there is a prima facie case made out on the evidence before me to grant the Injunction sought for in enclosure 1. [43] It has been shown to this Court, as per exhibit D-1, that the Plaintiff is prima facie the assignee via a Deed of Assignment and Irrevocable Power of Attorney dated 15.11.2017 (15.11.2017 DOA) of the JVA dated 6.1.2011 between the Defendant as the developer of the Project and the one Myacres Development Sdn Bhd (“MDSB”), the alleged landowner nominee, for a consideration of RM400,000. The facts before this Court at exhibit D3 further shows that the Defendant and one Virgin Properties Sdn Bhd (“VPSB”) the Assignor under a Deed of Assignment cum Profit Sharing Agreement dated 25.3.2011 (25.3.2011 DOA) had agreed to assign all the Assignor’s rights under the vested in VPSB under the JVA to the Plaintiff herein. [44] I have thereafter prima facie observed based on a perusal of exhibit D28 that VPSB had allegedly paid the Plaintiff the sum of RM400,000 via 2 letters dated 15.11.2017 and 28.12.2017 from its solicitors. I also note that the Defendant had allegedly received the 15.11.2017 DOA from the Plaintiff as per exhibit D27 although this fact is denied by the Defendant. [45] The evidence before this Court then shows that the Defendant had allegedly received various payments, as shown in exhibit D5, from the various purchasers of units 2,7, 9, 10 and 11 amounting to approximately RM3,200,000. [46] It was further shown to me that via Letter of Award dated 10.12.2014, at exhibit D6, the Defendant appointed one Superbtech Construction Sdn Bhd (“SCSB”) to complete the Project after the previous contractor had abandoned the Project and that amongst the terms provided therein, the Defendant was to make a final payment of RM2,348,334.50 to the said SCSB but only partial payments of approximately RM1,083,000 were allegedly made by the Defendant to SCSB as seen in the payment cheques at exhibit D7. [47] I have also noted that thereafter the Plaintiff had alleged that it had to pay further sums to complete the Project and that the Defendant had allegedly demanded further progress payments from the purchasers of units nos 2 and 7. There is however no evidence of the same produced before this Court. [48] Purchasers of units nos. 2 and 7 had thereafter allegedly executed an agreement with one Rentas Optima, who the Plaintiff alleges is an associate company of the Plaintiff, whereby inter alia the sum of RM79,000 from each purchaser was to be paid to the Developer’s Solicitors but that to date they have not received the same. [49] Finally, this Court has been also been shown, at exhibit D15, that the Plaintiff had written to the Defendant via a letter, which was allegedly received on 2.6.2023, seeking the project account be given to the Plaintiff and for the Defendant to refrain from dealing with the Project further, and that it was averred by the Plaintiff that the Defendant had allegedly been trying to sell or rent units no 3 and 5 as seen in a Whatsapp conversation in exhibit D17. [50] To date it was averred by the Plaintiff that the Defendant has received approximately RM2,500,000 to RM3,000,000 but has failed to account for the same. To this I have noted that the Defendant has produced Exhibit X-11 as their Statement of Account entitled “Statement Received & Made by ZZ Bina Sdn Bhd Excluding Unpaid Invoice Claims” but the same was not supported by any documents to evidence the said alleged amounts received or payments made. [51] From all of the above evidence, I do make a prima facie finding that the Plaintiff and the Defendant had by the DOA’s mentioned above, acted on the same and that the Plaintiff had allegedly invested monies into the Project. [52] The Injunction applied by the Plaintiff is in essence to restrain the Defendant who had allegedly assigned all its rights in the Project to the Plaintiff from dealing with the Project in any manner whatsoever pending the outcome of the Arbitration proceedings. [53] I have already referred to section 11 of the Arbitration Act 2005 which allows for an interim measure before or during arbitral proceedings and after due consideration of the same, I hold that this Court has the power to so grant the orders applied for by the Plaintiff and in doing so I am granting the order pursuant to this Court’s power under the said section for inter alia:

the preservation, interim custody or sale of any property which is the subject-matter of the dispute;

ensuring that any award which may be made in the arbitral proceedings is not rendered ineffectual by the dissipation of assets by a party; and

an interim injunction or any other interim measure. [54] In coming to this Court’s decision, I must refer to and with respect am in consonant with the decision in Padda Gurtaj Singh & Ors v Axiata Group Bhd & Ors [2022] MLJU 526 where Justice Ong Chee Kwan held: “[61] Accordingly, in the exercise of the Court’s discretion whether to issue an interim injunction as an interim measures under Section 19J(1) or Section 11(1) of the AA 2005, the application of the American Cynamid test may not be appropriate. There is no necessity for the Court to determine the question whether there is a serious issue to be tried. The fact that matter has been brought before the arbitral tribunal in itself is premised on the existence of a ‘dispute’. If the existence of this ‘dispute’ is challenged, surely then it must be for the arbitral tribunal to determine. It seems to me that if the Court were to make a finding at the application for interim measures that there is a serious issue to be tried in respect of the dispute, the Court would have prejudged the matter, taking it out of the hand of the arbitral tribunal, if an application is made to challenge the existence of such dispute later.” [55] I therefore hold that in making an order for an interim measure such as the interim injunction sought herein before this Court, the wider interest of preventing harm to the effectiveness of the final award is to be taken into consideration by the Court in making such an order. In such a case the Court must also balance the necessity and urgency of making such an order against the effect of not making such an order. [56] Thus, from the evidence before me and based on the principles I have referred to above, I am satisfied that the Plaintiff has prima facie shown to this Court that they have a cause of action against the Defendant for the prayers sought and that there is a necessity for this Court to preserve the subject matter of the Arbitration vis a vis the Project and that it is necessary to maintain the status quo of the matter. [57] I will therefore grant an Order in Terms of prayers 1 and 2 of enclosure 1 herein. Prayer 3 however is hereby dismissed as I am of the view that such an application should be made in the Arbitration proceedings. I will also grant costs of this action under enclosure 1 to the Plaintiff. [58] Enclosure 3 is hereby rendered academic in light of the orders granted by this Court in enclosure 1 and I will make no further order as to costs therein. Dated: 10th day of June 2024 sgd. NADZARIN WOK NORDIN HIGH COURT JUDGE CONSTRUCTION COURT 1 COUNSEL FOR THE PLAINTIFF: T. Gunaseelan, Rabia binti Abd Halim, T.A Sivam and MK Lee (Messrs Rabia, Farihan & Sures] COUNSEL FOR THE DEFENDANT: Dato’ Kamalanathan Ratnam, Vinod a/l R. Kamalanathan and Anis Amirah Jakaria (Messrs Vinod Kamalanathan & Associates]