1. ) Gazzriz Sdn Bhd v 1. ) Hasrat Gemilang Sdn Bhd (WA-24C-46-06/2016 & WA-24C-28-05/2016)

that the Adjudication Decision of Mr. Devandran A/L Subramaniam dated 7 March 2016 be stayed pending the final determination of this application;

a declaration that the Adjudication Decision is null and void because the Adjudicator did not meet the competency standard and criteria of an Adjudicator set by Kuala Lumpur Regional Centre of Arbitration ("KLRCA") pursuant to Section 32 of CIPAA and Regulation 4 of the Construction Industry Payment and Adjudication Regulations 2014 (“CIPAA Regulations”);

an order that the Adjudication Decision be set aside on the ground that:

it was given in excess of the Adjudicator’s Jurisdiction; 11

(ii) and/or in breach of the rules of natural justice during the adjudication proceedings;

(iii) and/or in connection with the making the Adjudication Decision;

(iv) a fresh evidence shows that the amount due to Defendant is only RM603,981.32 instead of Adjudication Decision is RM1,541,925.17. [24] The Respondent relied on the following grounds to set aside the Adjudication Decision that:

There was a breach of natural justice in that: i. The decision was made based on non-existence of Contract Agreement ii. A fresh evidence shows that the decision is wrong.

The said Adjudicator does not possess the experience and qualification and is therefore incompetent. Principles [25] An Adjudication Decision may only be set aside under the very limited grounds provided for under section 15 CIPAA. Section 15 CIPAA provides that an Adjudication Decision may be set aside as follows: 12 “15. An aggrieved party may apply to the High Court to set aside an adjudication decision on one or more of the following grounds:

the adjudication decision was improperly procured through fraud or bribery;

there has been a denial of natural justice;

the adjudicator has not acted independently or impartially; or

the adjudicator has acted in excess of his jurisdiction.” [26] The Respondent sought to set aside the Adjudication Decision under paragraph 15 (b), (c) and (d) of CIPAA 2012. As authority learned counsel for the Respondent referred to:

ACFM Engineering & Construction v Esstar Vision Sdn Bhd &

WRP Asia Pacific Sdn Bhd v NS Bluescope Lysaght Malaysia Sdn Bhd & Other Case [2015] 1 LNS 1236. [27] The Adjudicator Decision was given on Interim Certificate No. 25 and No. 26. The Respondent contended that fresh evidence showed that this Certificate No. 25 and No. 26 had been superseded by the Penultimate Certificate. The Respondent argued that the Penultimate Certificate clearly 13 showed that there are changes in amount of claim under Interim Certificate No. 25 and No. 26 from RM1,541,925.17 to RM603,981.32 on the following grounds as mentioned in the exhibit:

We have omitted payment to nominated subcontractor which the developers have paid directly;

We have made changes to the piling works due to the receipt of the piling records which have changes in the size and number of piles;

For the valuation works we have recalculated the cost base upon the architect instruction issued.

We have allowed the previous payment amount based upon client’s advice. [28] The Respondent contended that the Adjudicator Decision of 7 March 2016 Interim Certificate No. 25 and No. 26 is against natural justice and in breach of natural justice as the actual amount due to the Claimant are as follows: Original contract sum : RM29,828,500.00 Total Nett Addition/Omission : RM 5,976,423.32 14 New Contract Sum : RM23,852,076.68 Value of work done and Other payable amount : RM23,852,076.68 Deduct previous payment : RM23,248,095.36 Nett current work done value : RM 603,981.32 Recommended payment RM603,981.32 [29] The Respondent argued that the new contract sum is only RM23,852,076.68 whereby the Original Contract sum is RM29,828,500.00. [30] The Respondent further argued that the Adjudicator never and did not have the opportunity to consider these changes of contract sum. [31] The Respondent has totally misconceived the ground of natural justice in its attempt to set aside the Adjudication Decision. To begin with, even if there be some truth in the Respondent's assertion that the amount owing to the Claimant should be a very much less amount of RM 603,981.32, that so-called error of the Adjudicator cannot be attributed to a breach of natural justice. To be clear, these so-called fresh evidence was not before the Adjudicator. Surely the Adjudicator cannot reopen the 15 Adjudication Proceeding after the delivery of his Adjudication Decision and neither would this Court at this stage of setting aside the Adjudication Decision under the limited grounds of section 15 CIPAA allow the so-called fresh evidence to be admitted. There is simply no room for that altogether as this application is not an appeal. [32] The requirements of natural justice is that both sides must be heard before a tribunal hands down its decision. Here the Adjudicator had the opportunity to hear the Claimant's claim as set out in the Payment Claim and the evidence in support as set out in the supporting documents to the Adjudication Claim. [33] The Respondent, for reasons best known to them, did not file a Payment Response nor an Adjudication Response. Surely the Adjudicator cannot be faulted for considering the Claimant's evidence in support of its claim and in the absence of evidence to rebut the Claimant's claim, to find on the balance of probabilities in favour of the Claimant. [34] It is clearly not a case of the Adjudicator refusing to hear the Respondent but that there was nothing forthcoming and filed by them and nothing to contradict the Claimant's claim. The Adjudicator was thus entitled to come to the decision that he did and it would be an abuse of the 16 Court's process to now say that there had been a breach of natural justice just because the Adjudicator decided in favour of the Claimant based on the documents submitted. [35] This is not a case of an Adjudication Decision given in default as it were, but one arrived at after the Adjudicator had perused the documents filed by the Claimant and was satisfied in the absence of rebuttal evidence to the contrary by the Respondent, the Claimant had proved their payment claim. The Respondent's dissatisfaction with the weight of evidence given by the Adjudicator in the absence of documents to the contrary submitted by the Respondent is not a matter that this Court can intervene and much less interfere since it has nothing to do with natural justice and certainly not a ground countenanced under section 15 CIPAA; this being not an appeal. [36] This was how the Adjudicator expressed how he had arrived at his Decision in the absence of any Payment Response and Adjudication Response filed by the Respondent: “Upon perusing the relevant documents submitted in the Adjudication Claim by the Claimant Solicitors and since the Respondent have not served the Payment Response nor Adjudication Response, I am of the opinion that the claimant had succeeded in proving their claim 17 and hence I hereby allow their claim as stated in their Adjudication Claim with interest as provided in clause 30.07 of the Agreement and Conditions of their Contract and also costs.” [37] Learned counsel for the Respondent then mounted the argument that the Adjudicator had referred to a non-existent document as clause 30.07 of the Agreement was the PAM Contract 2006 which the parties have not signed. This, he contended, was a breach of natural justice, as the said PAM Contract 2006 is not a valid contract as the parties have not signed it. [38] Section 2 CIPAA provides that it shall apply to every construction contract made in writing relating to construction work. KLRCA has issued a Guideline on the meaning of "construction contract made in writing". This Guideline, though not binding on the Courts, would be a useful guide nevertheless in areas where some may see a doubt and this Court would be at liberty to adopt and endorse it if it makes statutory sense and further the purpose of CIPAA. The Guideline is reproduced below: "The Construction Industry Payment and Adjudication Act 2012 (“CIPAA”) came into operation on 15 April 2014. Section 2 of the Act provides that statutory adjudication regime shall apply to construction contracts made in writing.” 18 [39] However, no definition or further elaboration is provided in the Act as to what ‘construction contract made in writing’ means. [40] Given the fact that there are various means by which a construction contract may be made, a clear guideline on the meaning of a ‘construction contract made in writing’ will ensure that parties to a construction contract are guided as to whether or not payment disputes arising under their contract can be referred to adjudication under the Act. Further, it will eliminate the need for the adjudicator who may not be legally trained to grapple with the complexity of the issue of whether a construction contract is in writing. [41] As such the KLRCA is of the view that it would be expedient and/or necessary to provide clear guidance and definition as to what the phrase ‘construction contract made in writing’ mean, for giving full effect and the better carrying out of the provisions of the Act. [42] The KLRCA adopts the following definition of a ‘construction contract in writing’: ‘Construction Contract In Writing’

There is a contract in writing:- 19

if the contract is made in writing (whether or not it is signed by the parties);

if the contract is made by exchange of communications in writing; or

if the contract is evidenced in writing.

Where parties agree otherwise than in writing by reference to terms which are in writing, they make a contract in writing.

A contract is evidenced in writing if a contract made otherwise than in writing is recorded by one of the parties, or by a third party, with the authority of the parties to the contract. The KLRCA Guideline on Construction Contract in Writing shall apply to all adjudication cases commenced under CIPAA. A copy of the KLRCA Guideline can be found at: www.klrca.org.my Dated 28th day of April, 2014. Sgd Professor Datuk Sundra Rajoo Director of KLRCA" (emphasis added) 20 [43] As can be seen the PAM Contract 2006 need not have been executed by the parties so long as parties in the Letter of Award which is in writing and executed by the parties have referred to the PAM Contract 2006 in writing and agreed to be bound by it. [44] The Respondent further contended that the Adjudicator is in breach of natural justice when he failed to decide that only Letter of Award dated 21 July 2010 is valid and applicable for both parties. [45] It cannot be overstated that the unsuccessful party in an Adjudication must not simply raise the ground of breach of natural justice in setting aside an Adjudication Award just because that party now disagrees with the interpretation of law or finding of facts based on the evidence or both. The ground of breach of natural justice should not be used as a backdoor way to set aside an Adjudication Decision made after both parties have been given the opportunity to submit their Payment Claim and Payment Response and followed by Adjudication Claim and Adjudication Response and if need be an Adjudication Reply after that. A Respondent who does not avail itself of the opportunity to file the Payment Response and Adjudication Response cannot be heard to shout and scream that there had been a breach of natural justice. It is singularly devoid of merits and will not be entertained by the Courts. 21 [46] I recall the Singapore case of Am Associates (Singapore) Pte Ltd v Laguna National Golf and Country Club Ltd [2009] SGHC 260, and the dicta Judith Prakash J, in a context not dissimilar to ours: “23. There are two rules of natural justice: the first is that a man should not be the judge in his own cause and the second is that the judge or Adjudicator or other arbiter must hear both side of the dispute. The second rule is often referred to by its Latin tag, audi alteram partem. Laguna’s submission, while not specifically identifying which rule of natural justice had been breached, appeared to refer to the second one.

Laguna submitted that the Adjudicator had failed to comply with the rules of natural justice in that in coming to the Adjudication Determination, he had failed to take into consideration and/or give proper weight to materials tendered by AMA which showed a discrepancy in AMA’s claim, in particular, its claim that the Concept Design had been approved. Its submissions went into the evidence in order to establish the alleged discrepancy and it then argued that if the Adjudicator had given proper consideration and weight to such discrepancy and had taken into consideration the relevant evidence 22 tendered by the parties, he would have held that all payment claim made by AMA had been made prematurely.

Although the paragraph above contains only a brief summary of Laguna’s contentions, it can be gathered from such summary that what Laguna was complaining about was not really a failure on the part of the Adjudicator to hear both sides of the dispute but a failure on his part to decide the dispute as Laguna considered it should be decided. The audi alteram partem rule required the Adjudicator to receive both parties submissions and consider them; it did not require him to decide the dispute in accordance with Laguna’s submissions. It was clear from the Adjudication Determination that the Adjudicator had conducted the adjudication in accordance with the principles of natural justice: he had called an adjudication conference at which both parties were able to make their submissions, an opportunity which Laguna had availed itself of. Thereafter, as the Adjudication Determination itself made plain, the Adjudicator gave consideration to all points raised and he then came to certain conclusions for which he gave his reasons. However dissatisfied Laguna may be with those decisions, it cannot ask for the Adjudication Determination to be 23 set aside because it considers the decisions to be against the weight of the evidence.

The principles of natural justice are concerned with the provision of a fair hearing to contending parties. They do not mandate any particular result. As long as the parties have been given a fair hearing, the decision cannot be set aside for failure to comply with natural justice. A party who is dissatisfied with the decision on its merits cannot use the principles of natural justice to have the decision set aside...” (emphasis added) [47] That 'error' if there be will have to be corrected at Arbitration or Litigation as the Adjudication Decision is only of interim finality and will be overtaken by the fully final Arbitral Award or Litigation Judgment. However to this day the Respondent has not proceeded with any Arbitration or Litigation to correct the so-called error or wrong decision. [48] I would like to echo what was said by Justice Ravinthiran Paramuguru J. in Bina Puri Construction Sdn Bhd v Hing Nyit Enterprise Sdn Bhd [2015] MLJU 941, as follows: “[9] ... In the premises, the criticism of the Adjudication Decision by the applicant must clearly point to a breach of natural justice or a 24 jurisdictional error in the adjudication process. Otherwise, the instant proceeding would be converted to a full blown appeal or a rehearing of the adjudication process. ... As I said earlier, section 15 does not envisage that the decision of the Adjudication can be reviewed on its merits. Therefore, it is immaterial if the Adjudicator had erred in his finding of facts.” [49] Learned counsel for the Claimant had also referred to the following cases: a) UDA Holdings Bhd v Bisraya Construction Sdn Bhd & Anor and another case [2015] 11 MLJ 499; b) Subang Skypark Sdn Bhd v Arcradius Sdn Bhd [2015] 11 MLJ 818; and c) Mudajaya Corp v Leighton Contractors (M) Sdn Bhd [2015] 10 MLJ 745. [50] An Adjudicator's finding of facts are not reviewable in a section 15 CIPAA application to set aside the Adjudication Decision, more so when no 25 Payment Response and no Adjudication Response have been filed at all. Any attempt to introduce fresh evidence must fail in limine. Whether the Adjudication Decision is null and void on ground that the Adjudicator has not met the competency standard and criteria set by the KLRCA [51] The Respondent has prayed for a declaration that the Adjudication Decision of the learned Adjudicator is null and void be caused the Adjudicator did not meet the competency standard and criteria of an Adjudicator as set by the KLRCA pursuant to section 32 of CIPAA and Regulation 4 of the CIPAA Regulations. [52] Under section 4 CIPAA an "Adjudicator" means an individual appointed to adjudicate a dispute under CIPAA. The appointing authority under CIPAA for an Adjudicator under section 21 CIPAA is the Director of the KLRCA unless the parties can agree between themselves within 10 working days from the service of the Notice of Adjudication by the Claimant. [53] Here the Claimant had served the Notice of Adjudication dated 28 October 2015 on the Respondent by way of A R Registered Post on 3 November 2015. In the said Notice of Adjudication the Claimant had 26 proposed to the Respondent that an Adjudicator be appointed by the Director of the KLRCA pursuant to section 21(a) CIPAA to determine the dispute. [54] The Claimant further stated that if they do not receive any response from the Claimant by 4 November 2015 then the Claimant shall proceed to request the Director of KLRCA to appoint an Adjudicator. This is in line with the procedure under section 21(b) CIPAA and the Director of the KLRCA had appointed Devandran A/L Subramaniam as the Adjudicator, following the procedure in section 23(1) CIPAA. [55] The Respondent said they did not agree to the appointment of the said Adjudicator. It must be stated here that it was precisely because the parties could not agree on the common appointment of an Adjudicator that an independent body, the KLRCA as prescribed under CIPAA, was called upon to make the appointment. [56] If the Respondent has serious objection to the appointment of the said Adjudicator on ground of competency, they must then make their objection immediately. It would be too late to object on ground of competency once the Adjudication Decision has been delivered unless the facts affecting his competency was only discovered later and could not be 27 discovered with reasonable due diligence before the Decision was delivered. [57] Delay in raising this objection and raising it for the first time after the Decision has been given smacks of bad faith on the part of the Respondent who is scrabbling the bottom of the barrel to raise every possible ground to set aside the Decision not in its favour. That simply would not do. [58] Under subsection 32 (2) of CIPAA 2012 and Regulation 4 (a) of CIPAA Regulations 2014, the competency standard and criteria of an Adjudicator is that an Adjudicator must have had at least 7 years of working experience in the building and construction industry in Malaysia or any other fields recognized by KLRCA. Regulation 4 reads as follows:

Competency standard and criteria of adjudicator The competency standard and criteria of an adjudicator are as follows: a) the adjudicator has working experience of at least seven years in the building and construction industry in Malaysia or any other fields recognized by the KLRCA; b) the adjudicator is a holder of a Certificate in Adjudication from an institution recognized by the Minister; 28 c) the adjudicator is not an undischarged bankrupt; and d) the adjudicator has not been convicted of any criminal offence within or outside Malaysia. [59] The Respondent submitted that the Adjudicator’s qualifications and working experience are as follows:

Adjudicator obtained a Degree in Law LLB (Hons) and Certificate of

No working experience in the building and construction industry in

Or any other field recognized by KLRCA. [60] Learned counsel for the Respondent then concluded that the said Adjudicator has not met the competency standard prescribed under CIPAA and the CIPAA Regulations. [61] The parties admits that the said Adjudicator is a practicing lawyer with over 20 years experience. He is selected by the KLRCA from its panel of Adjudicators. He would have gone through the relevant training and examination conducted by the KLRCA before being empaneled as a certified Adjudicator by the KLRCA. The minister in charged has reposed a 29 considerable measure of discretion on the KLRCA to determine what the other relevant fields of experience would be if it is not a case of having at least 7 years experience in the building and construction industry in Malaysia. Legal experience would be highly and directly relevant as an Adjudication would require a fair bit of legal interpretation of the relevant terms of various contractual documents. [62] In this particular case it involves a rather straight forward reading and understanding of the relevant terms of when payments certified would become due under the Contract and there was no Defence in the nature of a Payment Response filed which would require a detailed study of the intricacies of a construction contract with its technical details in engineering. Even if it would require such an understanding, an Adjudicator has the powers under section 25(e) CIPAA to appoint independent experts to inquire and report on specific matters with the consent of the parties. [63] For the Respondent to seriously mount this challenge, it must allude to clear evidence that the said Adjudicator does not have the said professional qualification that he is said to have, or that he does not have the proper certification as an Adjudicator by the KLRCA, or that he is an undischarged bankrupt or that he has committed a criminal offence within or outside Malaysia. Absent that, the Respondent's attempt to declare the 30 Adjudication Decision as null and void arising from what is alleged to be a failure to meet the competency standard and criteria set by the KLRCA, is clearly spurious and bereft of merits altogether. [64] I would follow the approach taken by Mary Lim J (now JCA) in WRP Asia Pacific Sdn Bhd v NS Bluescope Lysaght Malaysia Sdn Bhd & Other Case [2015] 1 LNS 1236 where a similar objection was raised on the competency of the Adjudicator: "[68] However, Parliament recognised that other fields may be equally competent. The discretion is left to the best judgment of KLRCA. It would seem that KLRCA has not published or made public, again through the Government Gazette, which or what other fields are recognised. A publication in the Government Gazette makes good sense and certainly the better practice; and it should be the preferred option. [69] Be that as it may, in an email dated 10.6.2015, KLRCA informed WRP that pursuant to regulation 4 of the CIPAA Regulations 2014, the Adjudicator "has fulfilled the competency standard and criteria of an Adjudicator". KLRCA further advised WRP that the "Adjudicator has working experience of at least seven years in the building and 31 construction industry in Malaysia or any other fields recognised by the KLRCA" and it provided WRP with attachments 1 and 2 for this purpose. [70] Attachment 1 contains the Adjudicator's resume while Attachment 2 contains KLRCA's application form together with the relevant certificates. KLRCA also informed WRP that the Adjudicator "is a holder of a Certificate in Adjudication from an institution recognised by the Minister. In Attachment 3 is the Adjudicator's Certificate of Adjudication issued by KLRCA. Attachment 4 containing Form 6 as given by the Adjudicator to the parties on 9.6.2015. [71] With KLRCA's reply, which this Court accepts, KLRCA must be taken to have seen fit to recognise this Adjudicator's working experience in what must be "other fields". Although it is not immediately apparent what that working experience may be, or whether a person with the qualifications such as that held by this Adjudicator is enough, this Adjudicator has nevertheless attended the requisite course and training; and is a holder of a Certificate of Adjudication from KLRCA [presumably KLRCA is currently the only institution recognised by the Minister]. In that sense, this Adjudicator is said to have met the 32 competency standard and criteria to be an Adjudicator under CIPAA

[72] KLRCA thinks so and it says so such that it has included the Adjudicator's name in the register; and has seen fit to appoint him as Adjudicator. That being the case, the Court accepts that the Adjudicator in question has indeed met the standards and criteria set by KLRCA. This ground of complaint is therefore not acceptable." (emphasis added) Pronouncement [65] I had accordingly made an order dismissing the Respondent's application to set aside the Adjudication Decision with costs of RM10,000.00. Correspondingly l had allowed the Claimant's application with costs of RM5,000.00 to enforce the Adjudication Decision made under Section 28 of the CIPAA which reads: “Enforcement of adjudication decision as judgment: 1) A party may enforce an adjudication decision by applying to the High Court for an order to enforce the adjudication decision as if it is a judgment or order of the High Court. 33 2) The High Court may make an order in respect of the adjudication decision either wholly or partly and may make an order in respect of interest on the adjudicated amount payable. [66] Allocatur to be paid before extracting order of costs Dated: 14 November 2016. - Sgd - Y.A. LEE SWEE SENG Judge Construction Court Kuala Lumpur For Plaintiff in WA-24C-28-05/2016 : Rizal Zulkeply For Defendant in WA-24C-46-06/2016 (Messrs Rizal & Co) For Plaintiff in WA-24C-46-06/2016 : Ab Wahab Che Kob For Defendant in WA-24C-28-05/2016 : (Messrs Kamarudin, Wee &