The COVID-19 Act suspends contractual obligations during its operation, rendering notices of default and termination void, with unconscionability as a valid ground to restrain calls on performance bonds.

JUDGMENT

Wan Ahmad Farid Wan Salleh J:

The Appeals

[1] There are two appeals before us arising from the decision of the High Court , which, by the consent of the parties, are heard together.

[2] The appeals are as follows:

(a) Civil Appeal No: B-02(C)(A)-516-03/2022 ("Appeal 516"). Appeal 516 relates to the appellant's appeal against the learned Judge's decision, which dismissed the appellant's Originating Summons ("OS") dated 31 March 2021; and

(b) Civil Appeal No: B-02(IM)(C)-517-03/2022 ("Appeal 517"). Appeal 517 relates to the appellant's appeal against the learned Judge's decision to allow the respondent's Notice of Application dated 21 April 2021 in setting aside the ex parte injunction.

The Parties And The Contract

[3] The respondent is a subsidiary of Projek Lintasan Kota Holdings Sdn Bhd. It is responsible for overseeing the construction of the Damansara-Shah Alam Elevated Expressway, also known as "DASH".

[4] The appellant, Panzana Enterprise Sdn Bhd, was appointed by the respondent company as the main contractor for the project known as:

Projek Penswastaan Lebuhraya Bertingkat Damansara-Shah Alam Package DASH-CA4 - Construction and Completion of Mainline and Other Associated Works from CH. 4983 to CH.9307.

The Letter of Acceptance dated 4 August 2016 ("LA") was acknowledged and accepted by the appellant.

[5] The value of the contract, according to cl 7.0 of the Conditions of Contract dated 27 February 2017 ("COC"), is RM670,000,000.31.

[6] The commencement date of the Project is 29 August 2016 and the completion date is 28 February 2019. The completion date was later extended to 30 December 2020.

[7] In addition to the COC and LA, the Project is also governed by two other documents. They are the Special Provisions to the COC ("SPCOC") and a Supplemental Agreement dated 24 September 2020.

The Bank Guarantees

[8] Clause 13.1(a) of the SPCOC stipulates that the appellant, as the contractor, shall provide a performance bond issued by a licensed Bank to secure the due performance of the obligations under the Contract. Pursuant to the said clause, the appellant provided a Bank Guarantee ("BG") dated 22 August 2016 issued by Ambank (M) Bhd for the sum of RM33,500.000.02 ("Ambank Guarantee 1") in favour of the respondent as the performance bond.

[9] On 4 February 2021, the appellant, at the request of the respondent, further provided another BG for the sum of RM10,000,000.00, also issued by Ambank ("Ambank Guarantee 2"). Ambank Guarantee 2 was procured in return for the respondent's partial release of the retention sum to the appellant.

Notice Of Default

[10] On 10 February 2021, the Project's Superintending Officer ("SO") issued a notice of default. The Notice of Default, purportedly made under cl 51.1(a) of the COC, alleged that the appellant failed to proceed with the works regularly and diligently. It inter alia states as follows:

Therefore, pursuant to cl 51.1 (a) of the Conditions of Contract, we now serve you this NOTICE OF DEFAULT which you are required to remedy the aforesaid defaults within fourteen (14) days of the receipt of this Notice FAILING WHICH the Superintending Officer shall have the right to forthwith terminate the Contract by giving you a written notice pursuant to cl 51.1 (b).

[11] The appellant disputed the notice and, by a letter dated 19 February 2021 to the respondent, registered its strong disagreement with the allegations of default. According to the appellant, the Project consultant should not have rejected the appellant's application for an extension of time. The appellant insisted that the reasons for the application were valid since:

(i) there was a delay in receiving the Project information; and

(ii) there was also a delay in procuring the authorities' approval, including from the Malaysian Highway Authority.

[12] In short, it is the appellant's position that the purported Notice of Default was wrongful.

[13] The respondent did not accept the appellant's explanation.

[14] On 29 March 2021, the SO issued a notice of