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2012 MarsdenLR 1074
HIGH COURT MALAYA KUALA LUMPUR
LIFE PLAZA SDN BHD – Appellant
Versus
PASUKHAS CONSTRUCTION SDN BHD – Respondent
[Suit No: 22NCVC-1230-12/2011]
The existence of an arbitration clause in the PAM Contract prevails despite non-signature, and filing of defense under compulsion does not waive the right to seek arbitration.
Headnote:(A) Arbitration Act 2005 - Section 10 - Application for stay pending arbitration - The plaintiff claims for Liquidated and Ascertained Damages against the defendant for project delay. The defendant asserts existence of an arbitration clause in the PAM Contract. Court finds the PAM Contract valid and binding despite the plaintiff's claims that it was not signed. Court determines that the defendant has not taken positive steps that would bar a stay. (Paras 10, 30)
(B) Legal effect of steps taken in proceedings - Filing of defense under compulsion does not imply submission to jurisdiction when coupled with a timely application for stay. (Paras 20, 30)
Facts of the case:
The plaintiff sought RM6,450,000 from the defendant for LAD due to a delay in project completion. The defendant applied for a stay citing arbitration agreement in the PAM Contract.
Findings of Court:
The court ruled the agreement contains a valid arbitration clause and that the defendant's actions did not indicate submission to the court's jurisdiction.
Issues: Whether the PAM Contract binds the parties and if the defendant's actions preclude a stay of proceedings pending arbitration.
Ratio Decidendi: The court emphasized the validity of the arbitration clause in the PAM Contract and determined that procedural steps taken by the defendant did not constitute a waiver of its right to seek arbitration except when actions indicate unequivocal submission to jurisdiction.
Result: Stay of proceedings granted and matter referred to arbitration.
| Table of Content |
|---|
| 1. plaintiff's claim for damages. (Para 1 , 2) |
| 2. defendant's argument for arbitration clause. (Para 3 , 4 , 5 , 6) |
| 3. plaintiff's opposition to arbitration. (Para 7 , 8 , 9) |
| 4. court's examination of contract clauses. (Para 10 , 11 , 12) |
| 5. judgment on the arbitration agreement validity. (Para 13 , 14 , 15 , 16) |
| 6. court's determination of 'steps' taken. (Para 17 , 18 , 19 , 20) |
| 7. legal precedent on procedural steps. (Para 21 , 22 , 23 , 24 , 25 , 26) |
| 8. filing of defense seen as procedural step. (Para 27 , 28 , 29 , 30) |
[1] The plaintiff, Life Plaza Sdn Bhd, claims against the defendant, Pasukhas Construction Sdn Bhd, for a sum of RM6,450,000, interest and costs as Liquidated and Ascertained Damages ("LAD")for the late completion of the project described as 'Cadangan Mendirikan 1 Blok Bangunan 6 Tingkat Mengandungi Ruang Pameran, Pejabat, Expo, Auditorium dan 2 Tingkat Aras Bawah Tanah Ruang Letak Kereta di atas Lot 1027, Seksyen 69, Jalan Loke Yew, Kuala Lumpur' ("the project").
[2] Vide a Summons in Chambers (encl 4)the defendant has applied for a stay of all proceedings in this case pending remission to arbitration pursuant to s 10 of the Arbitration Act 2005 which application is opposed by the plaintiff.
The Defendant's Arguments
[3] The defendant's application is premised on its claim that the construction agreement between the parties contains an arbitration clause. According to Enoch Tan Jee Chai, the defendant's project manager in his Affidavit in Support (encl 5), the plaintiff, and the defendant had agreed in cl 1 of the letter of award to adopt the Building Contract (Private Edition with Quantities - edn 1998; Revised October 1998 ("PAM Contract"). And pursuant to cl 34.1 of the PAM Contract, the parties had agreed to refer any dispute relating to the project to arbitration.
[4] The defendant contends that both the governing law and the authorities ( Albilt Resources Sdn Bhd v. Casaria Construction Sdn Bhd , ; Taman Bandar Baru Masai Sdn Bhd v. Dindings CorporationsSdn Bhd; )are in support of its application.
[5] Secondly, the defendant contends that it has not taken any steps in the proceedings which could bar it from applying for a stay of proceedings. Although the defendant had entered appearance in this case, it contends that the authorities (Sanwell Corporation v. Trans Resources Corporation Sdn Bhd & Anor, ;Chuan Hup Agencies Pte Ltd v. Global Minerals (Sarawak)Sdn Bhd;Agibs Engineering & Construction Sdn Bhd v. Paragon Advance Solutions Sdn Bhd would support its argument that the entry of appearance does not prejudice its right to apply for a stay of proceedings to refer the case to arbitration.
[6] As regards its filing of the defence, the defendant contends that the defence was filed and served pursuant to the strict instructions of the court to do so on or before 30 January 2012 failing which judgment in default of defence would be entered against it. In complying with the directions of the court, the defendant had nevertheless stated in the said defence that it was filed without prejudice to its rights and interests in applying for a stay of proceedings pending remission of the dispute to arbitration. As such, the defendant contends that it had not elected to proceed with this matter before this court and neither had it exhibited an unequivocal intention to proceed with the matter or to abandon its rights to have the matter disposed off by arbitration.
The Plaintiff's Arguments
[7] It is the plaintiff's case that the PAM Contract does not bind the parties as it is a separate contract from the letter of offer and would need to be signed by both before it could bind the parties. As such, the plaintiff argues that until the formal PAM contract is prepared and signed, it is only the letter of award and the tender documents which would form the contract documents in this case.
[8] The plaintiff further contends that the defendant had taken various steps in these proceedings before making the application for
