Kerajaan Malaysia v MAJU JAYA PASARANA SDN BHD
11 cases cited
(0 SG, 11 foreign)
Catchwords
The Plaintiff was the Government of Malaysia, acting through the Ministry of Works, and the Defendant was a construction company engaged under a PWD 203A contract to construct a 40-bed hospital in Bera, Pahang. Pursuant to a Letter of Acceptance dated 20.6.2012, the Defendant undertook to complete the project for a contract sum of RM88 million within 30 months. Although multiple extensions of time totalling 690 days were granted, the Defendant’s work progress reached only 57% against a scheduled 99%. Following repeated warnings and the issuance of a Notice for the Purpose of Determining the Contractor’s Employment, the Plaintiff terminated the Defendant’s employment on 8.12.2016. A replacement contractor was appointed to complete the remaining works. Thereafter, a Perakuan Kos Penamatan dated 30.8.2019 was issued, certifying additional costs of RM35,989,018.43 incurred by the Plaintiff as a result of the Defendant’s default. Despite receipt of the certificate and a Notice of Demand, the Defendant failed to make payment. The Plaintiff commenced the present action by writ on 29.8.2025 to recover the certified termination costs. The Defendant applied for a stay of proceedings under section 10 of the Arbitration Act 2005, contending that the dispute ought to be referred to arbitration pursuant to the arbitration clause in the contract. The Plaintiff argued that the dispute fell outside the scope of the arbitration clause as it concerned termination costs arising after the contract had been determined, that the certified sum constituted an admitted debt. The Defendant contended that the arbitration clause survived termination, that it applied broadly to disputes arising out of or in connection with the contract, and that the court was mandatorily required to grant a stay once a valid arbitration agreement was shown to exist. Held, dismissing the application for stay and allowing the civil action to proceed, with costs of RM5,000.00: (1) The Defendant’s right to challenge the alleged wrongful termination accrued on 21.12.2016, when it expressly acknowledged and responded to the termination. Any claim arising therefrom became statute-barred on 21.12.2022. Consequently, the Defendant was no longer entitled to invoke arbitration in respect of termination-related disputes. (2) The cause of action in respect of any challenge to the Perakuan Kos Penamatan arose on 30.8.2019, upon issuance of the certificate and Notice of Demand. The limitation period for referring that dispute to arbitration expired on 30.8.2025. The Defendant’s stay application filed on 23.10.2025 was therefore out of time. (3) Clause 56.5 of the contract constituted a conclusive evidence clause, contractually agreed between the parties, providing that the Perakuan Kos Penamatan issued in accordance with the contract was final and conclusive evidence of the sum due and payable, in the absence of fraud or manifest error. (4) By virtue of the conclusive evidence clause, the certified sum of RM35,989,018.43 crystallised into an enforceable debt. (5) The Defendant had expressly disputed the termination costs in 2019 and represented that the matter would be referred to arbitration, but failed to take any steps to do so within the limitation period. The burden lay squarely on the Defendant, as the party alleging wrongful termination and disputing the Perakuan Kos Penamatan, to timely invoke the arbitration mechanism and to disprove the certified amount by establishing fraud or manifest error.
Judges (1)
Counsel (4)
Statutes Cited
Arbitration Act 2005 (Cap 646)
Limitation Act 1953 (Cap 254)
Cases Cited (11)
UK (1)
[1997] 3 All ER 540
MY (10)
[1986] 1 MLJ 177 [2002] 5 MLJ 490 [2011] MLJU 1576 [2014] 10 MLJ 633 [2015] 1 MLJ 74 [2016] 5 MLJ 4175 [2018] 7 MLJ 530 [2021] MLJU 1826 [2024] 5 MLJ 856 [2024] MLJU 3754
Judgment
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Read on eJudgmentSource: eJudgment (cb-21c-1-08-2025)