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2020 MarsdenLR 1480
COURT OF APPEAL PUTRAJAYA
GARDEN BAY SDN BHD – Appellant
Versus
SIME DARBY PROPERTY BERHAD – Respondent
[Civil Appeal No: W-02(C)(A)-2268-12/2016]
Arbitration awards should not be disregarded for perceived breaches of natural justice if the arbitrator's decisions are reasonably foreseeable and rooted in contract terms.
Headnote:(A) Arbitration Act 2005 – Sections 37 and 42 – Appeal against High Court's decision to set aside arbitration awards – Grounds included breach of natural justice and decision on issues outside the arbitration submission – The Appeal Court allowed the appeal, reinstating the arbitration awards. (Paras 1, 18, 60, 71)
(B)
Natural justice – The arbitrator's findings on retention sum as rectification costs upheld as not in breach of natural justice; the consideration of usual practices permissible. (Paras 28, 44, 59)
Facts of the case:
The appellant, Garden Bay, sought enforcement of an arbitration award for unpaid amounts from Sime Darby, who counterclaimed and was partially awarded. After the High Court set aside both awards, Garden Bay appealed.
Findings of Court:
The appellate court found that both awards were not in breach of natural justice, nor were they outside the terms of submission to arbitration, thus allowing the appeal.
Issues
: The main issues included whether there was a breach of natural justice and whether the awards dealt with disputes outside the submission to arbitration.
Ratio Decidendi:
The court reasoned that the arbitrator acted within her jurisdiction and did not breach natural justice, affirming the importance of adherence to arbitration procedures and resulting contract terms.
Result:
Appeal allowed, reinstating arbitration awards.
[1] This is the appellant's appeal against the decision of the High Court Judge dated 7 November 2016, who had set aside both the Arbitration Award dated 6 November 2014 ('Award') and the Supplementary Award dated 28 October 2015 ('Supplementary Award') pursuant to s 37(1)(b)(ii), 37(2)(b)(i) and/or 37(2)(b)(ii) of the Arbitration Act 2005 (' AA 2005').
[2] Having considered the Appeal Record and the submissions of all parties, this Court had allowed the appeal with costs. Our decision was unanimous and these are our grounds for allowing the appeal and for ease of reference, parties will be referred to as they were in the High Court.
The Salient Facts
[3] Vide a letter of acceptance dated 8 February 2011, Sime Darby Property Bhd ("Sime Darby") had appointed Garden Bay Sdn Bhd ("Garden Bay"), as their contractor for turfing and landscaping works for a project known as "Cadangan Pembangunan Landskap bagi Membina 132 Unit Rumah Teres Dua Tingkat Dan Tiga Tingkat Serta Dua Unit Pencawang Elektrik Di Fasa I-8, Seksyen U16, Denai Alam, Shah Alam, Selangor Darul Ehsan" for a lump sum of RM846,175.50 ("the project").
[4] Disputes and differences arose between the parties and these were then referred to arbitration as stipulated in clause. 54 of the Conditions of Contract ('Contract').
[5] Garden Bay was the claimant at the arbitration, claiming for the sum of RM338,666.39 being the balance sum remaining unpaid, interests and costs.
[6] The respondent, Sime Darby had counterclaimed for general damages to be assessed for the claimant's delay in completing the landscape works, the sum of RM246,978.00 for rectification works, together with interests and costs.
[7] The arbitrator heard witnesses from both parties and on 6 November 2014, handed down her Award and made the following determination in para 5.0 of the Award:
(i) that Sime Darby pays Garden Bay the sum of RM282,512 as the final amount due to Garden Bay as at 23 October 2013;
(ii) that Sime Darby pays Garden Bay simple interest at the rate of 5% per annum on the said sum of RM282,512 calculated from 23 October 2013 until the date of the arbitration award;
(iii) that Sime Darby pays Garden Bay simple interest at the rate of 5% per annum on the said sum of RM282,512 from the date of the arbitration award until full and final satisfaction of the said sum;
(iv) that Sime Darby pays Garden Bay the cost of the arbitration of RM20,500;
(v) that Sime Darby pays its own cost and the cost of its solicitor; and
(vi) Sime Darby pays Garden Bay the cost and the cost of its solicitor on a client - solicitor basis to be taxed by the Court.
[8] In respect of Sime Darby's counterclaim, the arbitrator's finding were as follows at para 4.40:
"Considering all the facts and circumstances available to the Arbitrator for this arbitration, I find and hold the Claimant is liable to pay LAD of RM35,000.00 to be set off from the Final Certificate Amount of RM338,666.39 due to the Claimant.
As to costs for rectification work not completed as at 26 December 2012, I find and hold that the amount of Claimant's liability is 2 A % of Contract Sum amounting to RM21,154.39 as per Para 2.35, to be set off from the Final Certificate Amount of RM338,666.39 due to the Claimant."
[9] Aggrieved by the said Award, Sime Darby had filed an Originating Summons No: 24C(ARB)-13-03/2017 ("First OS") under s 37 and alternatively under s 42 of the AA 2005, to set aside the whole of the award, which favoured Garden Bay on its claim and partly in Sime Darby's favour on the counterclaim for damages and rectification works.
[10] During the proceedings of the First OS, the High Court had ordered the arbitral tribunal, pursuant to subsection 42(3) of the AA 2005, to state in sufficient detail, within 45 days from the date of the service of the Order or such other period as the parties may agree, the reasons for the finding that the Garden Bay was liable for RM21,154.39 as costs of rectification of defects when Sime Dar
