PEMPETISYEN BINA GOODYEAR BERHAD (In Liquidation) IMEJ TENGGARA SDN. BHD

JA-28NCC-56-04/2023 Kand. 36 13/02/2025 09:46:43 IN THE HIGH COURT OF MALAYA IN JOHOR BAHRU IN THE STATE OF JOHOR DARUL TAKZIM COMPANIES (WINDING-UP) PETITION NO: JA-28NCC-56-04/2023 In the matter of Section 465(1)(e) and Section 466(1) of the Companies Act 2016. And In the matter of Terms of Consent Recorded by the Parties on 26 November 2019 before the Honourable High Court Judicial Commissioner Tuan Awg Armadaya Bin Awg Mahmud at Johor Bharu High Court Winding Up Petition No: JA-28NCC-229-11/2016 And In the matter of IMEJ TENGGARA SDN BHD (Company No. 763226-V) BETWEEN BINA GOODYEAR BERHAD (in liquidation) (Company No. 18645-H) …PETITONER AND IMEJ TENGGARA SDN BHD (Company No. 763226-V) …RESPONDENT 1 S/N HRXPHTwgX0GsFS8QovXmgA **Note : Serial number will be used to verify the originality of this document via eFILING portal GROUNDS OF JUDGMENT (Enclosure 6) [1] This is a judgment by this Court allowing enclosure 6 (referral to arbitration application) filed by the Respondent, a company, in opposing the winding up Petition filed by the petitioner. The Respondent relied on clause 45 of the Design and Build Contract, entered between the both of the Companies at the commencement of the agreement to a building project. Background [2] The Petitioner vide a Letter of Award dated 1.9.2010, was appointed by the Respondent as the main contractor of a project known as “Cadangan Pembangunan Enterprise Komersial dan Perdagangan (PARCEL B) yang mengandungi- Budget Hotel (517 unit) di Tingkat 4 hingga 12 di atas sebahagian Lot 365, 262, Dan 174, Seksyen 92, Jalan Loke Yew Dalam, Bandaraya Kuala Lumpur (Design and Build) (“the said project”). [3] The contract sum was for RM58,800,000.00 (RM Fifty-Eight Million Eight Hundred Thousand only). Both then entered into a Design and Build Contract (“DBC”) dated 3.10.2010 that carry the said clause 45 which stipulates the stages as to the available recourse that should be resorted to by parties in the event of any dispute or differences. Clause 45 (see: exhibit “LCP-2” of Affidavit in Support enclosure 7 at page 60 pdf) states as follows: 2 S/N HRXPHTwgX0GsFS8QovXmgA **Note : Serial number will be used to verify the originality of this document via eFILING portal “45. ARBITRATION Reference to 45.1 If any dispute or difference shall arise Employer’s between the Employer and the Representative Contractor, either during the progress for a decision or after completion of the Works, or after the determination, or breach of the Contract, as to: 45.1.1 The construction of this Contract, or 45.1.2 Any matter or thing of whatsoever nature arising hereunder or in connection herewith; Then such dispute or difference shall be referred to the Employer’s Representative for a decision Employer’s 45.2 The Employer’s Representative’s Representative’s decision which is to be in writing shall decision to be subject to Clause 45.4 be binding on binding until the parties until the practical completion of completion of the Works and shall the Works forthwith be given effects to by the Contractor who shall proceed with the Works with all due diligence whether or not notice dissatisfaction is given by him Reference to 45.3 If the Employer’s Representative fails Arbitration to give a decision for a period of 21 days after being requested to do so by the Contractor or if the Contractor be dissatisfied with any decision of the Employer’s Representative, then in any such case the Contractor may within 14 days after the expiration of 21 days after he had made his request to the Employer’s Representative require that such dispute or difference be referred to arbitration and final decision of a 3 S/N HRXPHTwgX0GsFS8QovXmgA **Note : Serial number will be used to verify the originality of this document via eFILING portal person to be agreed between the parties to act as the Arbitrator Power of the 45.4 The Arbitrator shall have power to Arbitration 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 in accordance with Clause 45.3 aforesaid, in the same manner at if no such certificate, opinion, decision, requisition or notice had been given Discretion of 45.5 Upon every or any such reference the Arbitrator in costs of and incidental to the reference respect of cost and award shall be in the discretion of and award the Arbitration who may determine the amount thereof, or direct the amount to be taxed as between solicitor and Client or as between party and party, and shall direct by whom and to whom and to what manner the same be borne and paid Award of the 45.6 The award of the Arbitrator shall be Arbitrator is final final and binding on the parties Appointment of 45.7 In the event of the death of the Arbitrator Arbitrator or his unwillingness or inability to act, then the Employer and the Contractor upon agreement shall appoint another person to act as the Arbitrator, an Arbitrator shall be appointed by the person named in Appendix 1 to the Conditions. ” The dispute or difference [4] On work done, a Certificate of Practical Completion dated 12.6.2012 (“CPC”) was issued by MK Looi Architect (see: exhibit “LCP-3” at page 124 pdf of enclosure 7). The dispute or difference arose from the failure 4 S/N HRXPHTwgX0GsFS8QovXmgA **Note : Serial number will be used to verify the originality of this document via eFILING portal by the Petitioner to attend and rectify the defects within the defects liability period which ended on 11.6.2013 The defects were notified via a notice dated 12.6.2013 comprising of defects reported between 21.5.2012 to 12.6.2013 (see: exhibit “LCP-4” at page 125 pdf of enclosure 7). [5] The “Defects Liability Period” clause 39.1 at page 52 (pdf) enclosure 7 states that any defects, shrinkages or other faults due to materials or workmanship not in accordance with the “DBC”, shall be notified by the Project Director (“PD”) in a written instruction to the contractor who shall within a reasonable time to be specified by the PD, make good such defects, shrinkages or other faults. [6] Due to non-compliance to make good the defects by the Petitioner contractor, the Certificate of Making Good Defects was not issued out by the Respondent. The non-rectification of defects, however was denied by the liquidator on behalf of the Petitioner in its affidavit in rebuttal enclosure 10 deposing that there were no positive actions to issue demands nor commence any legal actions against the Petitioner since 13.6.2013 for these purported failures, hence denied there was such issue ever raised by the Respondent. Findings by this Court [7] In addition to the above, the argument by the liquidator was also based on the fact that the CPC was already issued on 12.6.2012. This, (in addition to what has been presented in para 4 of this Grounds of Judgment) to this Court’s view can be easily dealt with by the presence of a “without prejudice” or a disclaimer clause that precedes the notification of ‘work completed’ in paragraph (a) of the CPC, the disclaimer states as follows: 5 S/N HRXPHTwgX0GsFS8QovXmgA **Note : Serial number will be used to verify the originality of this document via eFILING portal “To Contractor: In accordance with our Standard Form of Contract, I/we certify that subject to the making good of any outstanding items, or of any defects, shrinkages or other faults which appear during the defects liability period, -------------------------------------------------------------------------------------------- (delete a or b as necessary) a the works were completed to our satisfaction and taken into possession on : 12 June 2012 and that the said defects liability period will end on : 11 June 2013 --------------------------------------------------------------------------------------------------- b a part or section of the works, namely: the approximate value of which I/we estimate to be: was completed to our satisfaction and taken into possession on: and that in relation to the said part or section of the works, the said defects liability period will end on: --------------------------------------------------------------------------------------------------- …... --------------------------------------------------------------------------------------------------- -signed- ----------------(signature) Architect: Ar Looi Mun Kit -------------------------------------------------------------------------------------------------- …” [8] In short, the finding by this Court is that the issuance of the CPC is still subject to the Petitioner, (being the Contractor) to address the defects and to correct them. Furthermore, clause 39.2 of the “DBC” expanded further the said obligation of the Contractor when it contained the following requirement: “Notwithstanding clause 39.1, any defects, shrinkages or other faults which may appear during the Defects Liability Period to be made 6 S/N HRXPHTwgX0GsFS8QovXmgA **Note : Serial number will be used to verify the originality of this document via eFILING portal good shall be specified by the P.D. in the Schedule of Defects which he shall deliver to the Contractor not later than 14 days after the expiration of the Defects Liability Period. The defects, shrinkages or other faults specified in the Schedule of Defects shall be made good by the Contractor at his own costs and to be completed within a reasonable time but in any case not later than 3 months after the receipt of the said Schedule. Provided that the P.D. shall not be allowed to issue any further instruction requiring making good of any defects, shrinkages or other faults after the issue of the said Schedule of Defects or after 14 days from the expiration of the said Defects Liability Period, whichever is the later”. [9] The core point of the above clause in relation to the Contractor’s obligation to rectify the defects suggest that the notification of the defects by the Respondent can be extended beyond the Defects Liability Period. With this in mind, rightly so the period to make good the said defects by the Contractor must surely be allowed an extended time. For completeness, it is crucial for this Court to highlight the disparity on the time frame for the Respondent to identify the defects as shown in appendix 1 (see: page 66 pdf of enclosure 10) carry 2 numbers spelt out as “eighteen” and the figure “12”, in months. The “CPC” took the figure 12 to form the calculation of the time frame and this in line with the period contained in the “Letter of Award” (see: page 9 pdf of enclosure 7 Respondent’s affidavit in support). [10] This Court did not venture further to ascertain on the issues whether notices of defects if indeed have been issued by the Respondent and when they were issued, as this Court is of the view they are matters of dispute and difference that parties have in fact agreed to refer to an arbitration process. Suffice for this Court to conclude that having perused 7 S/N HRXPHTwgX0GsFS8QovXmgA **Note : Serial number will be used to verify the originality of this document via eFILING portal both the affidavits by the Respondent and the Petitioner Contractor’s affidavit in rebuttal to enclosure 6, and by looking at the notice dated 11.3.2015 prepared by the liquidator@ Petitioner (see: exhibit “BGB-5” page 205 pdf enclosure 10 Petitioner’s affidavit in rebuttal) notifying the Respondent of the status of the Petitioner in liquidation, this Court finds a common issue that there is a balance contract sum which remains unpaid. [11] This notice exhibit “BGB-5” contained a statement to the Respondent by the liquidator seeking for the payment of unpaid balance contract sum under the Project. The Respondent, in its affidavit in response to the Petitioner’s affidavit in rebuttal, contended that parties have agreed whereby only 85% of the Interim Certificates would be paid and any balance would be settled upon the Final Certificate. This, as deposed by the Respondent, can be seen from the payment records made (see: para 7 of enclosure 12). [12] This Court is of the view clause 41 of the “DBC” is relevant and it contains the following terms, which appears to support the Respondent’s stand that payment of works in making good defects permitted to be in interim: “41. PAYMENT Interim 41.1.1 Interim Payments shall be made by the Payment Employer to the Contractor in accordance with Clauses 41.2 to 41.5 41.1.2 The amount due as an Interim Payment shall be the gross valuation as referred to in Clause 41.2 less: 1. Any amount which the Employer may deduct and retain as provided in 8 S/N HRXPHTwgX0GsFS8QovXmgA **Note : Serial number will be used to verify the originality of this document via eFILING portal Clause 41.5 (in the Conditions called ‘the Retention Money’) and 2. The Sum of the amounts paid in previous interim Payments. … Retention 41.5.1 The Retention Money which the Employer Money may deduct and retain as referred to in Clause 41.1.2 is the total amount included under Clause 41.2 as arises from the operation of the following rules: 1.1 the percentage referred to in the Conditions shall be 10% of the total amount included under Clause 41.2 until the amount so retained shall reach the limit of retention which shall be 5% of the Contract Sum. 1.2 Upon Practical Completion of the Works, half of the retention shall be released to the Contractor. … … Final Account 41.6.1 Within 3 months of practical completion of and Final the whole of the Works, the Contractor Certificate shall send to the P.D. all documents necessary for the purposes of the computations required by these conditions and as the P.D. may reasonably require, thereafter, within 6 months the P.D. shall issue the Final Account for the endorsement of the Employer and the Contractor. …” 9 S/N HRXPHTwgX0GsFS8QovXmgA **Note : Serial number will be used to verify the originality of this document via eFILING portal [13] Whether this is the correct position, it obviously amounts to what can be said as a dispute amounting to a difference accorded to the meaning of the clauses in “DBC” by the Respondent or Petitioner contractor. The dispute or difference is further emphasized by the fact that the Petitioner contend that the Respondent not only failed to raise this alleged “non-rectification” in their response but that the notice issued by the Respondent is not a “Schedule of Defect” as required by clause 39.2. The Respondent certainly, disagreed with this assertion. [14] One final point to note is that, the Respondent may not have exhibited the necessary payment statements or any other relevant documents to rebut enclosure 1 as the Respondent at this stage is not specifically challenging the Winding Up Petition in enclosure 1, at least not yet. Enclosure 6 filed by the Respondent is seeking for a stay order of enclosure 1 pending referral to arbitration, hence it is understandable why the absence of some of these relevant documents as exhibits to the Respondent’s affidavits. [15] With all these issues at hand, moved this Court to a decision that parties have indeed agreed for all the dispute to be determined by way of an arbitration process as per clause 45. It is interesting to observe that the Petitioner had vide “Companies Winding-Up Petition No: JA-28NCC- 229-11/206” filed a similar claim to wind up the Respondent for the sum, said to be indebted by the Respondent of RM8,269,708.28 (see: notes of proceeding “exhibit-D” page 37 of enclosure 3) but was withdrawn. [16] The withdrawal of Petition 229 was said by the Petitioner done with the aim to seek for proposal of settlement to be initiated by the Respondent but there was none. The present winding up petition 10 S/N HRXPHTwgX0GsFS8QovXmgA **Note : Serial number will be used to verify the originality of this document via eFILING portal enclosure 1 addresses the same alleged debt. The Respondent is disputing this sum and submits that the notice issued under section 218 of the Companies Act 1965 merely lump this whole figure stating it to be “unpaid outstanding sum due and owing pursuant to the Letter of Award” without any itemized or particularization as to what the said amount entails (there is no new notice issued under section 218 of the old Act or section 466 of the Companies Act 2016 for this present enclosure 1). [17] To the contrary, the Petitioner was earlier wound up by the KL High Court on 10.9.2014 (see: Company search in exhibit “LCP-5” enclosure 7 the Respondent’s affidavit in support to enclosure 6) and this explains why the liquidator is in the picture acting or appearing on behalf of the Petitioner. This Court, having ventilated all the relevant cause papers including having sight of enclosure 1, have some reservation on whether the test of “inability to pay debt” required to order a winding up of a company in encl. 1 is satisfied, at least not until “the dispute and difference” is heard in the arbitration process for its determination. [18] In Lafarge Concrete (M) Sdn Bhd v. Gold Trend Builders Sdn Bhd [2011] CLJU 1763; [2012] 6 MLJ 817, the Court of Appeal dealt with this issue as to when a company is said “unable to pay its debt” and held as follows: "[6] Before we proceed to answer those questions, we should perhaps say that 'a creditor is not required to obtain a judgment before serving a statutory demand (The Law of Company Liquidation (4th Ed), by Andrew R Keay at p 83) and 'whether or not judgment had been obtained, an unpaid creditor is, as a general rule, entitled to a winding- up order against a company which is insolvent' (The Law of Company 11 S/N HRXPHTwgX0GsFS8QovXmgA **Note : Serial number will be used to verify the originality of this document via eFILING portal Liquidation (4th Ed), by Andrew R Keay at p 91). Where there is no judgment, it is not uncommon for companies to argue that the debt is disputed. But 'in order to oppose a winding up petition, the respondent must raise a bona fide dispute in both a subjective and objective sense. It must be honestly believed to exist and must be based on substantial or reasonable grounds - BMC Construction Sdn Bhd v. Dataran Rentas Sdn Bhd [2001] 1 CLJ 591; [2001] 1 MLJ 356 “(Chan & Koh on Malaysian Company Law (2nd Ed), at para 22.145).” [19] The Companies Act 2016 section 466 sets a guide as to the meaning of this term as follows: “Section 466. Definition of "inability to pay debts" (1) A company shall be deemed to be unable to pay its debts if— (a) the company is indebted in a sum exceeding the amount as may be prescribed by the Minister and a creditor by assignment or otherwise has served a notice of demand, by himself or his agent, requiring the company to pay the sum due by leaving the notice at the registered office of the company, and the company has for twenty-one days after the service of the demand neglected to pay the sum or to secure or compound for it to the satisfaction of the creditor; (b) execution or other process issued on a judgment, decree or order of any court in favour of a creditor of the company is returned unsatisfied in whole or in part; or (c) it is proved to the satisfaction of the Court that the company is unable to pay its debts and in determining whether a company is unable to pay its debts the Court shall take into 12 S/N HRXPHTwgX0GsFS8QovXmgA **Note : Serial number will be used to verify the originality of this document via eFILING portal account the contingent and prospective liabilities of the company. (2) A petition to wind up a company shall be filed in the Court within six months from the expiry date of the notice of demand issued under paragraph (1)(a).” [20] As such, to “ensure the company's survival or achieving a more advantageous asset realization than in a winding-up”, it is only right and proper for the primary dispute be referred to arbitration in accordance with clause 45 first before a determination on this requirement of “unable to pay its debt” arising in enclosure 1 can be heard and argued by both parties before this Court (see: Jaya Sudhir v Nautical Supreme Sdn Bhd & Ors [2019] 7 CLJ 395) . [21] The liquidator @ Petitioner in disputing this, deposed that clause 45 is inoperative as it was contended that it can only be raised by the Petitioner when there was a decision made by the Respondent relating to contract terms that gave rise to a dispute, it was further contended that it is incapable of being performed as the dispute is post completion of a project and finally, the Respondent is time barred from relying on this arbitration clause for failing to aptly raise it to the Petitioner earlier. This Court disagree with this contention as the said sum of RM8,269,708.28 owing, based on the Petitioner’s notice under section 218 was for progress claim no. 1 to 18. [22] Furthermore, there is nothing in clause 45 to suggest that it is only intended to address issues arising from contract terms during subsistence of the contractual obligations of both parties. When the words of clause is 13 S/N HRXPHTwgX0GsFS8QovXmgA **Note : Serial number will be used to verify the originality of this document via eFILING portal clear and unambiguous, it is not for this Court to stretch those words with the aim to cater for other circumstances or make it feasible to either suit or limit a particular situation. As to the Respondent having taken steps in the proceeding, all were done on a without prejudice basis to adhere to the direction given during the case management of encl. 1 as otherwise the Respondent would have been in a state of predicament to either reply, to contest or otherwise do nothing. [23] On the allegation that the Respondent is being barred, both the Petitioner and Respondent agreed that there were correspondences (though not all received by the Respondent) and a meeting held with no agreement reached. This clearly demonstrate the dispute and difference arising between parties. For these reasons, enclosure 6 is allowed and a stay of enclosure 1 is granted pending referral to arbitration until its determination. Signed (NURULHUDA NUR’AINI BINTI MOHAMAD NOR) Judge High Court of Malaya Johor Bahru Dated: 12.02.2025 14 S/N HRXPHTwgX0GsFS8QovXmgA **Note : Serial number will be used to verify the originality of this document via eFILING portal COUNSEL For the Petitioner: Wallace Wong Messrs. Wong & Lu-Yen Partnership Advocates & Socilitors 7.07, Wisma Cosway No. 1 Jln USJ 10/1 47620 Subang Jaya Selangor For the Respondent: Leslie Looi Meng Messrs. Dennis Nik & Wong Advocates & Solicitors Suite 601-602 Bangunan Ang No. 1 Jln Jeram Taman Tasek 80200 Johor Bahru 15 S/N HRXPHTwgX0GsFS8QovXmgA **Note : Serial number will be used to verify the originality of this document via eFILING portal