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2020 MarsdenLR 3024
HIGH COURT MALAYA KUALA LUMPUR
JOHAWAKI DEVELOPMENT SDN BHD – Appellant
Versus
MAJLIS AGAMA ISLAM WILAYAH PERSEKUTUAN & ANOTHER CASE – Respondent
[Originating Summon Nos: WA-24C(ARB)-11-03/2019 & WA-24C(ARB)-12-03/2019]
An arbitral award can be set aside if the arbitrator fails to address all pertinent substantiated issues, violating the due process and public policy, particularly when public interest is concerned.
Headnote:(A) Arbitration Act 2005 – Section 37 – Setting aside of arbitration award sought by the claimant claiming breaches of natural justice and public policy due to the arbitrator exceeding his jurisdiction and failing to address all pertinent issues raised in the pleadings – Award set aside as unlawful. (Paras 76, 148)
(B) Arbitration proceedings – Arbitrator must adhere to pleadings provided by the parties and address findings made therein – Failure to do so constitutes a breach of natural justice. (Paras 60, 72)
(C) Public policy – Allowing double recovery violates principles of justice, particularly when public funds are involved in the respondent's operation. (Paras 140-142)
Facts of the case: The business dispute revolves around a Joint Venture Agreement between the parties involving property development, which resulted in arbitration and subsequent claims over the validity of termination and awarded damages. (Para 2)
Findings of Court: The court found multiple breaches, including failure to comply with the terms of the JVA and inadequate resolution of issues raised during arbitration. (Paras 75-80)
Issues: The primary issues included whether the arbitration award was made under proper jurisdiction, adherence to the pleas, and compliance with public policy standards concerning damages. (Paras 32, 36)
Ratio Decidendi: The court ruled that the arbitrator exceeded his jurisdiction by failing to analyze all legal arguments, leading to a serious breach of the rules of natural justice. (Paras 120-122)
Result: The Setting Aside Application was approved, terminating the arbitration award in favor of the claimant. (Paras 181)
Introduction
[1] The business relationship between the parties, Majlis Agama Islam Wilayah Persekutuan ('MAIWP') and Johawaki Development Sdn Bhd ('Johawaki'), which began approximately in September 2003 when Johawaki offered its wide experience in property development to develop a piece of MAIWP's land by way of privatisation, has been through a chequered history. Following a letter issued on 21 June 2004 indicating MAIWP's acceptance of the said offer, the parties entered into a Joint Venture Agreement ('JVA') on 24 August 2004.
[2] Unfortunately, what started as good intentions to build the Institut Kemahiran Baitumal ('IKB') for MAIWP in exchange for the balance of the land to be transferred to Johawaki for purposes of mixed development consisting of commercial and residential properties, ended with the parties being embroiled in a dispute leading to MAIWP's termination of the JVA on 26 June 2012.
[3] MAIWP then initiated arbitration and naturally, this was met with resistance by Johawaki who submitted its own counterclaim. The learned Arbitrator, Bhag Singh, eventually dismissed MAIWP's claim against Johawaki and allowed Johawaki's counterclaim in his Final Award dated 14 December 2018 ('Award').
[4] Johawaki filed Originating Summons (OS) No WA-24C(ARB)-11-03/2019 on 15 March 2019 pursuant to s 38 of the Arbitration Act 2005 [Act 646] (' AA 2005') seeking an order to enforce the Award ('Enforcement Application'). This was followed by MAIWP's OS No WA-24C(ARB)-12-03/2019, which was filed on 30 March 2019, wherein MAIWP sought, inter alia, to set aside the Award under s 37 2005 ('Setting Aside Application').
[5] Having heard oral submissions by learned counsels representing the parties and having read the OS, Affidavits and written submissions filed, I had allowed MAIWP's Setting Aside Application with costs of RM30,000.00 and dismissed Johawaki's Enforcement Application with costs of RM5,000.00. Both order as to costs are subject to the payment of allocatur fees.
[6] Johawaki has since appealed against my entire decision in allowing the Setting Aside Application whilst MAIWP is also pursuing its right of appeal against part of my decision where I refused to grant an extension of time for MAIWP to refer questions of law pursuant to s 42 AA 2005. The detailed prayers in respect of both OS will be elaborated further below together with my full reasons for the decision.
The Cause Papers
[7] The evidence before the Court in respect of the Setting Aside Application is in the following affidavits:
(a) MAIWP's Affidavit in Support ('AIS') affirmed by its Legal Manager, Wan Mohd Sanusi Bin Mohd Noor on 29 March 2019 (Enclosures 2 - 5);
(b) Johawaki's Affidavit in Reply ('AIR') affirmed by its Director, Mohamad Akmal Bin Johari on 30 April 2019 (Encl 7);
(c) MAIWP's AIR affirmed by its other Legal Manager, Izalina Binti Abdullah on 24 May 2019 (Encl 8); and
(d) Johawaki's Additional Affidavit affirmed by its counsel, Nur Allya Binti Abd Rahim on 8 August 2019 (Encl 22).
[8] The cause papers in relation to the Enforcement Application are as follows:
(a) Johawaki's AIS affirmed by Muhammad Yazid Bin Mohamad Salim, advocate and solicitor, on 13 March 2019 (Encl 2);
(b) MAIWP's AIR affirmed by Wan Mohd Sanusi Bin Mohd Noor on 30 April 2019 (Encl 5 - 8);
(c) Johawaki's Additional Affidavit affirmed by Nur Allya Binti Abd Rahim on 29 May 2019 (Encl 9);
(d) Johawaki's AIR affirmed by Mohamad Akmal Bin Johari on 29 May 2019 (Encl 10); and
(e) Johawaki's Additional Affidavit affirmed by Nur Allya Binti Abd Rahim on 31 July 2019 (Encl 21).
Background Facts
[9] MAIWP is the registered proprietor of a piece of land measuring 31.55 acres under registration number HS (D) 82758, PT 14301, Mukim Batu, Daerah Kuala Lumpur, Negeri Wilayah Persekutuan ('said Land'). The said Land is originally leasehold land with a tenure of 99 years which will expire on 30 January 2095. The express condition endorsed on the document of title to the said Land (r
