GROUNDS OF DECISION

1. This is an application by the defendant for a stay of proceedings under Section 6 Arbitration Act 1952 for reference of the dispute to arbitration. By a written agreement dated 18th July, 1996 between the defendant and the plaintiff, whereby the plaintiff was to construct 20 units of detached factories on Lot 996 to 1015, Block 7, at Demak Laut Industrial Park, M.T.L.D., Kuching for a sum of RM15,250,000. Pursuant to the agreement, the plaintiff had carried out the construction of the factories, and progress payments had been duly paid except for a sum of RM4,205,459.78 in respect of payment certificates no. 8, 9 and 10 which were withheld by the defendant for remedy of defects in the construction of the factories. There were negotiations between the parties. Then the plaintiff had also served on the defendant a letter of demand for the sum claimed (exhibit [2] STS 4), and there was no response. Then the plaintiff's solicitors took out a legal action against the defendant in respect of the said sum.

2. The defendant had entered an appearance, and applied for a stay of proceedings for reference to arbitration in accordance with clause 43 of the agreement. Clause 43 of the agreement, reads as follows:-

"43 Provided always that in case any dispute or difference shall arise between the Employer or the Engineer on his behalf and the Contractor, either during the progress or after the completion or abandonment of the Works, as to the construction of this contract or as to any matter or thing or whatsoever nature arising thereunder or in connection therewith (including any matter or thing left by this contract to the discretion of the Engineer or the withholding by the Engineer of any certificate to which the Contractor may claim to be entitled to or the measurement and the valuation mentioned in clause 15 of these Conditions or the rights and liabilities of the parties under clauses 30, 40 or 41 of these Conditions), then either party shall forthwith give to the other notice in writing of such dispute or difference, and such dispute or difference shall be and is hereby referred to the arbitration and final decision of a person to be agreed upon between the parties in accordance with and subject to the provisions of the Arbitration Ordinance, and the award of such Arbitrator shall be final and binding on the parties. Such reference, except on the questions whether or not the certificate has been improperly withheld or is not in accordance with clause 35 of these Conditions, or on any dispute or difference under clause 40 or 41 of these Conditions, shall not be opened until after the completion or alleged completion or abandonment of the Works, unless with written consent of the Employer or the Engineer on his behalf, and the Contractor. Subject to the provisions of clause 35(g) of these Conditions the Arbitrator shall without prejudice to the generality of his powers have power to direct such measurements and/or valuations as may in his opinion be desirable in order to determine the rights of the parties and to ascertain and award any sum which ought to have been the subject of or included in any certificate and to open up, review and revise any certificate, opinion, decision, requisition or notice and to determine all matters in dispute which shall be submitted to him and of which notice shall have been given as aforesaid, in the same manner as if no certificate, opinion, decision, requisition or notice had been given."

The defendant submitted that the onus is on the plaintiff in opposing the application for stay to show sufficient reason why it should not be referred to arbitration, and in support he cited the following 5 cases:-

TAN KOK CHENG & SONS REALTY CO. SDN. BHD. v LIM AH PAT (T/A JUTA BENA) (1995) 3 MLJ 273

LEE BROTHERS CONSTRUCTION CO. v TEH TENG SENG REALTY SDN. BHD. (1988) 1 MLJ 459 [3]

LAN YOU TIMBER CO. v UNITED GENERAL INSURANCE CO. LTD. (1968) 1 MLJ 181

LIM SU SANG v TECK GUAN CONSTRUCTION &