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2022 MarsdenLR 2595
HIGH COURT MALAYA KUALA LUMPUR
RAZMAN IBRAHIM & ORS – Appellant
Versus
AWANA VACATION RESORTS DEVELOPMENT BERHAD (AVRDB) – Respondent
[Civil Suit No: WA-22NCC-563-12/2021]
The court ruled that upon establishing an arbitration agreement under Section 10 of the Arbitration Act 2005, the proceedings must be stayed and referred to arbitration, emphasizing the validity and binding nature of the arbitration clause.
Headnote:(A) Arbitration Act 2005 – Section 10 – Application for a stay of proceedings and referral to arbitration pursuant to an arbitration agreement present in the Time Share Ownership Scheme Agreements – The Defendant sought to stay the action based on the arbitration clause existing in the Rules and Regulations – The court held that the requirements under Section 10 were satisfied, thus mandating the stay and referral to arbitration.(Paras 20, 21, 63)
(B) Arbitration Agreement – Construction – The court clarified the definition of an arbitration agreement and affirmed that even if not in a separate document, its inclusion in the main agreement suffices, underlining the importance of the Rules and Regulations which form an essential part of the TSO Agreements.(Paras 23, 25, 28)
(C) Jurisdiction and Governing Law – The court differentiated between governing law and how disputes are resolved, clarifying that the arbitration clause should function harmoniously with the jurisdiction clause in the TSO Agreements.(Paras 41-46)
Facts of the case: The application was made by the Defendant to stay the proceedings and refer the dispute to arbitration based on an arbitration agreement in the Time Share Ownership Scheme, following plaintiffs’ claims regarding the termination of the Scheme. (Paras 5, 13, 16)
Findings of Court: The court found the arbitration agreement valid and that the dispute fell within its terms, thus allowing the application and awarding costs to the Defendant. (Paras 63)
Issues: The primary issues involved the existence of an arbitration agreement, its applicability, and whether the plaintiffs were bound by the Rules and Regulations and the arbitration clause within the context of the agreement.(Paras 20, 29, 34)
Ratio Decidendi: The court underlined the mandatory nature of Section 10 of the Arbitration Act 2005 in referring disputes to arbitration when an arbitration agreement is established, confirming adherence to this statutory requirement of the law.(Paras 11, 19)
Result: Application allowed with costs awarded to the Defendant.(Paras 63)
JUDGMENT
(Enclosure 14)
[1] This was an application by the Defendant to stay this action and all proceedings in this action and for the dispute to be referred to arbitration pursuant to s 10 of the Arbitration Act 2005 (encl 14) ("this Application").
[2] The reliefs sought in this Application are substantially as follows:
"(1) tindakan di sini dan prosiding-prosiding dalamnya yang difailkan oleh Plaintif-Plaintif digantungkan dan semua pertikaian yang timbul dalam tindakan di sini dirujuk ke timbang tara mengikut perjanjian timbang tara yang terikat antara pihak-pihak;
(2) secara alternatif kepada pohonan (1), tindakan di sini dalam Writ dan Pernyataan Tuntutan bertarikh 22 Julai 2021 adalah dibatalkan menurut A 18 k 19(1)(b) dan (d) dalam Kaedah-kaedah Mahkamah 2012;
(3) pemfailan Pembelaan dan Tuntutan Balas adalah dikecualikan sehingga perintah selanjut Mahkamah Yang Mulia ini;
(4) prosiding bagi semua dan/atau sebarang notis permohonan yang difailkan oleh Plaintif-Plaintif dalam tindakan di sini digantungkan dan/atau ditangguhkan sehingga pendengaran dan pelupusan penuh permohonan Defendan ini dan/atau mana-mana rayuan daripadanya;
(5) kos permohonan ini dan semua kos sampingan ditetapkan oleh Mahkamah Yang Mulia ini dan dibayar oleh Plaintif-Plaintif dan/ atau Tetuan Syarikat Chan Chow Wang secara bersama-sama dan berasingan;"
[3] In his oral submissions learned counsel for the Defendant concentrated on prayer (1) of this Application rather than the Defendant's alternate prayer (2) to strike out this action.
[4] After hearing oral arguments from both parties, I allowed prayer (1) of this Application with costs. Below are the reasons for my decision.
[A] Salient Background Facts
[5] The Defendant is a management company under the Interest Schemes Act 2016 and was the operator of the Awana Time Share Ownership Scheme ("the Scheme") which was registered with the Registrar of Companies and the Companies Commission of Malaysia pursuant to Division 5 of Part IV of the Companies Act 1965 and subsequently the Interest Schemes Act 2016.
[6] On 18 May 1998, the Defendant executed a Trust Deed with MTrustee Berhad (formerly known as Arab-Malaysian Trustee Berhad or AmTrustee Berhad) and the persons who have executed or will execute the Time Share Ownership Agreement for the purchase of the Time Share Intervals with the Defendant ("Trust Deed").
[7] MTrustee Berhad is a company registered under the Trust Companies Act 1949 and was appointed to act as Trustee for the benefit of the purchasers of Time Share Intervals under the Scheme and the Time Share Owners upon the terms and conditions of the Trust Deed. The Trust Deed was made between the Defendant, MTrustee Berhad and all persons who have executed or might after the making of the Trust Deed execute the Time Share Ownership Agreement for the purchase of Time Share Intervals with the Defendant and registered as Time Share Owners.
[8] The Scheme is perhaps best described in cl 3 of the Trust Deed which states as follows:
"3. THE TIME SHARE OWNERSHIP SCHEME
3.1 The Operator intends to establish a Right to Use Time Share Ownership Scheme by the creation of fifty-one (51) units of Time Share Intervals for each unit of Apartment in the Resorts of which one (1) Interval shall consist of the right to the use of one Apartment in the Resorts for seven (7) nights in each calendar year and to manage and operate the Resorts as Time Share Resorts ("the Time Share Ownership Scheme"). The fifty-one (51) Time Share Intervals for each Apartment in the Resorts will be offered for sale to Purchasers subject to the terms and covenants set forth in this Deed."
[9] All eighteen Plaintiffs had executed eighteen individual Time Share Ownership Agreements with the Defendant dated between 13 December 1998 and 20 January 2008 (collectively "TSO Agreements").
[10] The terms of the Trust Deed are said to be binding on the Plaintiffs as the Trust Deed is specifically referred to in the TSO Agreement
