Ahmad Zaidi Ibrahim JCA:

GROUNDS OF JUDGEMENT

Introduction:

[1]The parties hereinafter shall be referred to as they were before the Johor Bahru High Court in Saman Pemula No.: JA-24C(ARB)-1-07/2021.

[2]Vide Saman Pemula No.: JA-24C(ARB)-1-07/2021 abovesaid, the Plaintiff (Sigma Elevator (M) Sdn. Bhd.) had applied for Security for Costs in the sum of RM400,000-00 against the Defendant (Perbadanan Pengurusan City Plaza) pursuant to section 11Arbitration Act 2005

[3]On 28.11.2021, the learned High Court Judicial Commissioner (JC) allowed the Plaintiff’s said application with Costs and ordered the said security sum be paid to the Plaintiff’s solicitor as a stakeholder.

The Findings and Rulings of The High Court Dated 28.11.2021:

[4]Based on the Grounds of Judgment (GOJ) the learned JC ruled that there is reasonable doubt about the Defendant’s ability to pay costs if the Defendant is unsuccessful at the arbitration. His Lordship’s ruling/order is founded on the following findings:

(i)that the Defendant is insolvent, as admitted by the Defendant, and that its account has been frozen. Its audited account for 2019 showed a deficit. (paragraphs 14 – 16 GOJ referred to). The learned JC referred amongst others, to the cases of Ling Khee Ming v Ling Shaw Kue @ Ling Chai Yues [2018] 1 LNS 1139 and Skrine & Co. v MBF Capital Bhd & Anor

(ii)that it is undisputed that the Defendant failed to pay costs ordered/awarded earlier to the Plaintiff amounting to RM80,000-00 and no cogent reason was given by the Defendant for such failure (paragraphs 18 – 21 GOJ referred). The learned JC referred to amongst others, the case of Sagajuta (Sabah) Sdn. Bhd. V Trane Malaysia Sales and Service Sdn. Bhd. [2017] 1 LNS 1243 and

(iii)as to the amount for security, based on the fact that the arbitration claim is for RM5 million, the Adjudication Decision (AD) sum is RM1 million plus and previous costs of RM80,000-00 the learned JC was of the view it was fair and reasonable (paragraphs 23 GOJ referred to).

[5]Dissatisfied with the aforementioned decision/order, Defendant appeals to the Court of Appeal. Hence, this Appeal before us.

Our Decision/Order:

[6]After having appraised the Appeal Records and considering the submissions by learned counsels for both sides, we unanimously found merits in the Defendant’s appeal. Hence, we accordingly allowed the Defendant’s Appeal herein with Costs of RM5,000-00, subject to the allocator. Accordingly, the order of the learned JC is thus set aside.

[7]We allowed the Defendant’s appeal on the following grounds:

Chronology of Events:

[8]The relevant chronology of events leading to the Plaintiff filing the application (Saman Pemula No. JA-24C(ARB)-1-07/2021) is as follows:

(i)vide Offer Letter dated 22.12.2014 the Defendant offered a contract titled “Proposed Lift Modernisation for City Plaza at 21, Jalan Tebrau, 80300 Johor Bahru” to the Plaintiff, to upgrade 11 lifts located in City Plaza in Johor Bahru (the Contract). The upgrading works cover:

(a)7 Tower Lifts (P3, P4, P5, P6, P7, P8 and P9);

(b)2 Car Park Lifts (P1 and P2); and

(c)2 Service Lifts (S10 and S11);

(ii)On 09.01.2015, the Plaintiff accepted the aforesaid offer. Parties agreed to the terms in the Offer Letter and to follow the PAM Contract (PAM Contract (without Quantity) 2006). The Contract was for approximately two (2) years, from 31.12.2014 until 11.11.2016. The Contract provided for an arbitration clause in the event of a dispute between the parties;

(iii)Subsequently, a dispute arose between the parties, culminating in the Defendant issuing a Letter dated 28.12.2016 to the Plaintiff, alleging that the Plaintiff had breached the Contract and had repudiated the same;

(iv)The Defendant conceded that works for nine (9) of the eleven (11) lifts had been performed and handed over by the Plaintiff. The Defendant, however, averred that the works relating to the nine (9) lifts were faulty and not properly upgraded as per the terms of the Contract and that two (2) lifts have yet to be up