1. ) Kayangan Kemas Sdn Bhd v 1. ) Ritma Hebat Sdn Bhd (WA-24C-69-04/2016 & WA-24C-90-05/2016)

a dispute which does not relate to a ‘construction contract’ as defined in section 4 of CIPAA 2012;

(ii) a dispute which relates to a construction contract entered into by a natural person for work in respect of any building which is less than four storeys high and which is wholly intended for his occupation as provided for in section 3 of CIPAA 2012;

(iii) a dispute which relates to a construction contract not in writing as provided in section 2 of CIPAA 2012;

(iv) a dispute which relates to a construction contract which had been exempted by the Minister pursuant to section 40 CIPAA 2012. [32] The common factor underlying the above occasions is simply that it concerns the original source of the jurisdiction of the adjudicator without which the power and the authority to adjudicate and decide will not be bestowed on the adjudicator. The adjudicator’s source of jurisdiction is by statute as opposed to common law based. To put it bluntly, the very existence of an adjudicator is premised on the CIPAA 2012 and his jurisdiction is circumscribed by that very statute. Put in another way, this sort of jurisdiction cannot be conferred upon the adjudicator by 14 consent or by waiver culminating from the conduct of parties for the simple reason that the adjudicator’s source of power originates from one source only and that is CIPAA 2012. [33] Hence, we say the case of Dato’ Tan Chin Woh v Dato’ Yalumallai @ M Ramalingam s/o V Muthusamy (supra) cited by learned counsel is, with respect, distinguishable to the case herein. In that case, it was a question whether parties are allowed to depart from their pleadings and Courts are allowed to do so in only exceptional circumstances. [34] Jurisdiction challenge has always been allowed by the Courts at any stage of proceeding. We can do no better than refer to the Privy Council case of Meenakshi Naidoo v Subramaniya Sastri LR 14 IA 160 which concerned the jurisdiction of the High Court at Madras where neither the parties nor the High Court raised the question of jurisdiction to hear an appeal from the District Court. The High Court then reversed the District Judge. On appeal to the Privy Council it was held that consent or waiver could not cure the absence of jurisdiction. Sir Richard Baggallay, when delivering the advice of the Board said (at p. 166): 15 It has been suggested, and it is not right altogether to pass that suggestion over, that, by reason of the course pursued by the present appellants in the High Court, they have waived the right which they might otherwise have had to raise the question of want of jurisdiction. But this view appears to their Lordships to be untenable. No amount of consent under such circumstances could confer jurisdiction where no jurisdiction exists. Upon this point it may be convenient to refer to the judgment of their Lordships delivered by Lord Watson in the comparatively recent case of Ledgard v Bull LR 13 IA 144, as it in very concise terms deals with the circumstances under which there can be a waiver of a right to complain of a want of jurisdiction. Their Lordships say: ‘The defendant pleads that there was no jurisdiction in respect that the suit was instituted before a court incompetent to entertain it; and that the order of transference was also incompetently made. The District Judge was perfectly competent to entertain and try the suit if it were competently brought; and their Lordships do not doubt that in such a case a defendant may be barred by his own conduct from objecting to irregularities in the institution of the suit. When the judge has no 16 inherent jurisdiction over the subject-matter of a suit, the parties cannot by their mutual consent convert it into a proper judicial process, although they may constitute the judge their arbitrator, and be bound by his decision on the merits when these are submitted to him. But there are numerous authorities which establish that when, in a cause which the judge is competent to try, the parties without objection join issue, and go to trial upon the merits, the defendant cannot subsequently dispute his jurisdiction upon the ground that there were irregularities in the initial procedure which, if objected to at the time, would have led to the dismissal of the suit.” (emphasis added) [25] By the same token, even though the jurisdictional challenge was not raised before the Adjudicator, that is no bar to raising it for the first time in the setting aside application. [26] The Statement of Final Account duly signed by the parties on 2.3.2017 is exhibited as Exhibit CKH 9 in the Affidavit in support of the Respondent (Enclosure 2) in the Setting Aside Application. It reads where relevant as follows: 17 “I/WE AGREED TO THIS STATEMENT OF FINAL ACCOUNT AND CONFIRMED THAT I/WE HAVE NO FURTHER CLAIMS UNDER THIS SUBCONTRACT.” [27] Above that Declaration is set out the Statement of Final Account as follows: ORIGINAL CONTRACT SUM 34,303,757.72 ADJUSTMENT OF PROVISIONAL QUANTITIES (14,793,343.12) REVISED SUBCONTRACT SUM 19,510,414.60 ADD(+)/OMIT(-) VARIATION ORDER(S). 833,688.05 FINAL SUBCONTRACT SUM 20,344,102.65 [28] As can be seen, nowhere is it stated from the Statement of Account that there is no outstanding sum owing by one party to the other. All that it stated is that parties agreed that the subcontract sum is for RM20,344,102.65. [29] I agree with learned counsel for the Claimant that the signing of the Statement of Final Account on 2.3.2017 was only to agree to the final subcontract sum which is part of the parties’ contractual obligation and has no relation to the Adjudication proceeding between both parties. The 18 Statement of Final Account signed on 2.3.2017 purely shows the value of work done under the original scope of the Subcontract (See paragraphs 11 and 12 of Ritma Hebat’s Affidavit in Reply in the Setting Aside Application). [30] In a situation, whereby an agreement was reached between parties on a particular sum to be adopted in a construction contract, it has been held by the High Court (TCC) in J. Murphy & Sons Limited v W. Maher and Sons Limited [2016] EWHC 1148 (TCC) that: “34 ...It was substituting a figure as due for whatever else was due by way of resolving a claim under the sub-sub contract (Application No. 21). If it was simply confirming the sum actually due under the sub-sub contract, there might be no consideration and no binding settlement contract but then the claim would be obviously referable to adjudication “under” the sub-sub contract” [31] Learned counsel for the Claimant also referred to Melville Dundas Ltd v Hotel Corporation of Edinburgh Ltd [2006] Adj.L.R. 09/07 for the distinction between a settlement that falls within the construction contract and as such is amendable to Adjudication and one that takes the dispute out of the construction contract and hence out of Adjudication as follows: 19 “[32] I agree with the defenders' contention that section 111 only applies to construction contracts; and that anything that is properly to be regarded as an independent settlement agreement will not fall under the section. The wording of the section makes clear that it only applies to construction contracts. These are defined in section 104(1) as meaning, in essence, any agreement for the carrying out of construction operations, arranging the carrying out of construction operations or providing labour for the carrying out of construction operations. If parties conclude an independent settlement agreement, that contract does not fall within the definition in section 104(1), and for that reason I respectfully agree with the views of Judge Humphrey Lloyd and Sheriff Principal Bowen in the two cases cited in the last paragraph. Nevertheless, it is important in my opinion to draw a distinction between settlement agreements that are independent of the underlying construction contract and agreements, which might in some circumstances be described as settlement agreements, which merely determine sums that are due under the construction contract. An example of the former category is an agreement to accept payment of a specified sum in full and final settlement of all claims arising out of a construction 20 contract. An example of the latter category is an agreement that the amount of the contractual retention under a construction contract should be fixed at a specified sum. In the latter type of case all that the parties have done is to agree a particular sum that is relevant for the purposes of their construction contract; that agreement will be given effect through the mechanisms available under the construction contract. An agreement of that nature must in my opinion be considered part of the underlying construction contract, because it has no existence independent of that contract. It is only settlement or compromise agreements that can properly be regarded as independent of the construction contract that escape the provisions of section 111. This is recognized by Judge Humphrey Lloyd in Shepherd Construction Ltd v Mecright Ltd, at paragraph 14, where he points out that the effect of a settlement agreement is to replace the original agreement to the extent to which the settlement agreement applies. [33] In some cases, of course, parties may conclude an agreement part of which are to be considered an independent settlement agreement and other parts of which are to be considered as giving effect to the construction contract. In my opinion this is such an 21 agreement. The provisions of paragraph b) that agree the final account and the contractual retention, together with the consequential certification, merely give effect to the construction contract, and must be operated through that contract. That must be contrasted with the provisions of paragraphs b) and d) that agree that £90,000 should be withheld pending resolution of the glazing issue and the manner in which that sum is to be dealt with and the glazing issue resolved. Those provisions are in my opinion an independent settlement of a discrete element in the parties' disputes. That settlement is not referable to the construction contract, but rather stands by itself. I am accordingly of opinion that section 111 does not apply to that part of the agreement. The parties' present dispute is, of course, concerned with the ability of the defenders to continue to withhold the sum of £90,000 specified in that part of the agreement. It follows that section 111 does not apply to the present case. For this reason the pursuers' argument based on that provision must be rejected.” (emphasis added) [32] I am in agreement with learned counsel for the Claimant that the said Statement of Final Account is in essence an agreement to agree on the final subcontract sum which shall be read together with the original 22 construction contract and not a separate settlement agreement as in a full and final settlement of the dispute. [33] Looking at the Statement of Account it is clear that what the parties had agreed is that the Final Contract Sum had been reduced accordingly with the Revised Subcontract sum of RM19,510,414.60 and taking into consideration the Variation Orders approved of RM833,688.05, the Final Subcontract Sum is RM20,344.102.65. [34] This is not a case where parties then say that whatever sums owing need not be paid. In fact what both parties had agreed is that only a sum of RM10,833,654.90 had been previously received by the Claimant as seen in the Table at paragraph 11 of the Adjudication Claim and confirmed by the Respondent in the Table at paragraph 23 of the Adjudication Response. [35] What had been agreed is that the parties would not deviate from the figure of the Revised Subcontract sum. [36] The fact that the Respondent did not take and interpret the Statement of a Final Account to mean there is no amount outstanding between the parties is clearly seen in the fact that in the suit filed by the Respondent to qualify the Respondent to apply for Stay of the Adjudication Decision, the Respondent as Plaintiff there has claimed against the Claimant as 23 Defendant there the back charges arising out of rectification and even a Liquidated and Ascertained Damages (“LAD”) Claim! [37] Surely the Respondent cannot approbate and reprobate and it is a flimsy foundation to rely on to say that the Claim was in the alternative to a no sum outstanding between the parties. [38] I must say it is an alternative claim that calls in question the very validity of the so-called settlement that leaves no amount outstanding between the parties. Either there is a settlement agreement which leaves no amount outstanding between the parties or that there is none. It cannot be that if there is no settlement agreement as reflected in the Statement of Account then there is a sum outstanding from the Claimant to the Respondent. [39] The fact that the Respondent had not been consistent in affirming that there is no amount outstanding between the parties could be further seen in the fact that the Respondent has raised in their Adjudication Response that there are Debit Notes to the tune of RM8,337,180.59 for which the Claimant was prepared to accept for the purposes of this Adjudication the sum of RM7,165,102.31 and so taking the Respondent’s calculation to be true for the sake of argument, the Respondent in the 24 Adjudication Response at paragraph 23 stated that there is the sum of RM546,093.85 owing from the Respondent to the Claimant. [40] Perhaps all these were before the Statement of Final Account dated 2.3.2017 as the Adjudication Reply was dated 20.1.2017. However the inconsistency surfaced again when in this application to set aside the Adjudication Decision, the Respondent contended that there was a breach of natural justice when the Adjudicator failed to consider the Debit Notes of RM8,337,180.59 claimed by the Respondent as a set-off against the Claimant’s Claim in the Notice of Adjudication. [41] Again the Respondent cannot blow hot and cold whenever it suits them for that itself would render their contention that there was a settlement with the Statement of Final Account somewhat hollow. More than that there is just no justification for that interpretation of the Statement of Final Account. [42] I would therefore hold that the Adjudicator acted within jurisdiction in deciding to proceed to deliver his Decision as there was no settlement arrived at. 25 Whether the Adjudicator had acted in excess of jurisdiction or in breach of natural justice in failing to take into account the Statement of Final Account in arriving at his Decision [43] The issue of the Statement of Final Account surfaced only after the Adjudication Reply had been served by the Claimant on the Respondent. Whilst the Statement of a Final Account has to be considered when raised in the context of whether a settlement had been arrived at by the parties, it is only relevant for that limited purpose. [44] Once that purpose had been served and spent, it is not relevant for the purpose of deciding the dispute as the parties are bound by the matters raised in the Payment Claim, Payment Response and also the Adjudication Claim, the Adjudication Response and the Adjudication Reply. No further documents are allowed under the CIPAA after the service of the Adjudication Reply unless parties applied to the Adjudicator or that the Adjudicator exercises his powers under section 25 of the CIPAA of which the following may be relevant: “25. Powers of the Adjudicator The adjudicator shall have the powers to— 26

Establish the procedures in conducting the adjudication proceedings including limiting the submission of documents by the parties;

Order the discovery and production of documents;

Set deadlines for the production of documents;...” (emphasis added) [45] There is no indication that the parties had applied for this additional document in the Statement of Final Account to be produced and admitted or that the Adjudicator had exercised his power to have this additional document admitted after the deadline set by the CIPAA. [46] For an Adjudicator to rely on a document submitted only after the service of the Adjudication Reply without the written consent of the parties as in extending his jurisdiction to include the matters raised in the new document in the Statement of Account would be to exceed his jurisdiction. Section 27(2) of the CIPAA reads as follows: “(2) The parties to adjudication may at any time by agreement in writing extend the jurisdiction of the adjudicator to decide on any other matter not referred to the adjudicator pursuant to sections 5 and 6.” 27 [47] Granted the parties should not act contrary to what they had agreed where the agreement on the Revised Subcontract Sum is concerned. In fact they acted consistent with the Statement of Account except for items that both parties could not agree with respect to the Debit Notes, Additional Variation Works and Retention Sum. The Adjudicator was perfectly right in not referring to the Statement of Account and he would have exceeded his jurisdiction if he had relied on it to arrive at his Decision. [48] There has been no breach of natural justice as the Adjudicator has invited the parties to submit on the validity of the Statement of Final Account but the Respondent had chosen not to submit its position (see paragraph 21 of the Claimant’s Affidavit in Reply for the Enforcement Application). See ACFM Engineering case (supra) and the Singapore case of AM Associates (Singapore) Pte Ltd v Laguna National Golf and Country Club Ltd [2009] SGHC 260. [49] Even if one looks at breach of natural justice from the point of view of a failure to consider a document properly placed before it, one may confidently say that an Adjudicator is obliged to consider the matters and documents served with the Payment Claim, Payment Response, Adjudication Claim, Adjudication Response and Adjudication Reply. He is not obliged to consider documents served after the service of an 28 Adjudication Reply and he cannot be said to be in breach of natural justice for not so considering. This does not prevent the parties from writing in at any time to agree on further facts before the delivery of the Decision. Where, as here, both parties are not in agreement as to the proper interpretation of the Statement of Final Accounts, surely the Adjudicator cannot be said to have acted in breach of natural justice in disregarding it, being a document brought to his attention after the service of the Adjudication Reply. Whether the issue of Debit Notes, Back Charges and Retention Sum not raised in the Payment Response but raised in the Adjudication Response for the first time have been considered by the Adjudicator [50] The Federal Court in View Esteem Sdn Bhd v Bina Puri Holdings Bhd [2017] MLJU 1852 decided that an Adjudicator shall not disregard the defences raised for the first time in the Adjudication Response but must consider it for otherwise it would be a breach of natural justice. The Federal Court explained as follows: “45. It needs to be emphasised here that the Adjudication Response under section 10(1) of CIPAA requires the non-paying party to “answer the adjudication claim” meaning the “nature 29 and description of the dispute and the remedy” as claimed by the claimant in its Adjudication Claim. It is also significant to note that it is at this stage of the proceedings that the unpaid party is termed by the CIPAA as “the claimant”, and the non-paying party as “the respondent”, by which terms they are thereafter respectively referred to. It comes about after the “initiation of adjudication” under section 8 of CIPAA where an adjudicator is appointed signifying the start of the adjudication process. The adjudication pleadings under section 9 to 11 of CIPAA comes after this and before the adjudication hearing begins under section 12 of CIPAA.” (emphasis added) [51] Later at paragraph 59 it was observed as follows: “59. We are of the view that in the absence of a prohibitory clause similar to section 15(3) of the Singapore Act 2006 and a similar restriction as above mentioned the NSW legislation, there is no impediment for the Adjudicator to consider all the grounds of claim in an Adjudication Claim under section 9 of CIPAA, and all the grounds of defence in an Adjudication Response under section 10 of CIPAA.” 30 [52] The Federal Court further emphasized the consequence of not considering the Defence raised in the Adjudication Response as a breach of natural justice following the case of Pilon Ltd. v Breyer Group plc [2010] EWHC 837 (TCC) as follows: “65. We are of the view that an Adjudicator who wrongly rules out considering a defence presented to him would be in breach of natural justice...” [53] When the Adjudicator delivered his Adjudication Decision, the position of the law then was that if a Defence is not raised in the Payment Response by the Respondent in the Adjudication, then under section 27(1) of the CIPAA, the Adjudicator should not take into consideration the defences raised for the first time in the Adjudication Response. See the High Court case of View Esteem Sdn Bhd v Bina Puri Holdings Bhd [2015] MLJU 695 at para [60] and affirmed by the Court of Appeal in View Esteem Sdn Bhd v Bina Puri Holdings Bhd [2016] 6 MLJ 717. The Debit Notes raised by the Respondent (Issue 3) [54] With respect to the Debit Notes, identified as Issue 3 by the Adjudicator, to be fair to the Adjudicator, he did say categorically at paragraph 14 of the Adjudication Decision as follows: 31 “14. Notwithstanding that I have highlighted only certain salient points of the Adjudication Response below, I have read in full and carefully considered all points/Issues raised in the Adjudication Response.” (emphasis added) [55] Likewise at paragraph 16 of the Adjudication Decision the Adjudicator also reiterated as follows where the Adjudication Reply is concerned: “16. Notwithstanding that I have highlighted only certain salient points of the Adjudication Reply below, I have read in full and carefully considered all points/Issues raised in the Adjudication Reply.” [56] It stands to reason that an Adjudication Reply cannot stand in or be considered in a vacuum but that it serves to reply or rebut the matters or Defences raised in the Adjudication Response. The Adjudication Reply has to be considered with reference to what it replied to and in this case, the Adjudication Response. [57] Moreover, as if to reiterate the matter, the Adjudicator at Part L where he sets out his “FINDINGS AND REASONS” had stated in paragraph 21 of his Decision as follows: “21. Having read the Adjudication Claim, Adjudication Response, Adjudication Reply and the Claimants legal submissions I find that 32 parties are in agreement that the Total Value of Work done is RM19,510,414.60 and payments made thus far totals RM10,833,654.90; and I therefore find as follows:..” (emphasis added) [58] The findings were supported by the reasons for each of their heads of Claims in the Debit Notes, Back Charges and Retention Sum that the Respondent argued the Adjudicator did not consider the matters raised by them in their Adjudication Response. [59] There is thus no merits in the Respondent’s submission that the Adjudicator had not considered the Defence of the amount of the Debit Notes raised by the Respondent being the costs of rectification works. In the Adjudication Response the Respondent had back charged these rectification works via Debit Notes to the Claimant. The Respondent averred in their Adjudication Response that the actual amount for deduction of the Debit Notes issued is RM8,337,180.59. The Adjudicator had allowed the sum of RM7,165,102.31 to be deducted as Debit Notes validly back charged and proved, albeit this sum was admitted by the Claimant in the Notice of Adjudication, the Adjudication Claim and the Adjudication Reply. The admission had been made by the Claimant for the purpose of the 33 Adjudication with the expressed reservation of rights to dispute it in the litigation subsequently. [60] Part of the reasons given by the Claimant in disputing the amount back charged by the Respondent was that there had been a unilateral increase in the number of Debit Notes when compared to the Respondent’s Draft Final Account (see paragraph 26 and 27 of the Adjudication Reply). It was also raised in the Adjudication Reply by the Claimant that some of the Debit Notes clearly do not relate to the Claimant’s scope of work and therefore should not be back charged to the Claimant without any justification (see paragraph 27 of the Adjudication Reply). [61] In the tabulation of the Debit Notes that the Claimant disputes, there is set out the “Reasons for disagreement” in the right column at paragraph 36 of the Adjudication Reply. [62] I do appreciate the concern raised by learned counsel for the Respondent that the Adjudicator might well have disregarded and ignored completely the Debit Notes claimed by the Respondent when at paragraph 25 of the Adjudication Decision the Adjudicator observed as follows: “25. ...Notwithstanding that the Payment Response is silent on this, the Adjudication Response claims that a sum of RM8,337,180.59 is 34 deductible based on the documents submitted in Schedule J as opposed to the sum accepted by the Claimant a being deductible which is RM7,165,102.31. However, I am inclined to accept the arguments put forth by the Claimant in its written submissions at paragraphs 30 to 36 of the Claimant’s Written Submissions and the case referred to therein and the cases referred to at paragraphs 29 to 31 of the Adjudication Reply.” (emphasis added) [63] The expression “inclined to accept” is not the language of a firm pronouncement but that of a favouring predilection and so any doubt must be resolved in favor of the Adjudicator who had stated that he had “carefully considered” all points/issues raised in the Adjudication Response and the Adjudication Reply. Moreover the Adjudication Decision is only of Interim finality such that where quantum of a head of Claim or set-off as a Defence, the correction, if there be error, can always be done at the Arbitration or after trial in Court. [64] Parliament being fully aware of this reiterated at section 13(c) of the CIPAA that the Adjudication Decision is binding unless the dispute is finally decided by arbitration or the court. [65] I am not persuaded by learned counsel for the Respondent that the 35 Adjudicator would have come to a different finding assuming for a moment that he had failed to consider the disputed Debit Notes raised by the Respondent in the Adjudication Response and that he should rightly have taken that into consideration. Judging from the other findings of the Adjudicator with respect to the conduct of the Respondent in not finalizing the Statement of Final Accounts until the Adjudication was about to be concluded and in not releasing the Retention Sum even though the Defect Liability Period is over and based on the detailed reasons given by the Claimant for objecting to the Debit Notes, coupled with the lack of submissions filed by the Respondent as they had elected not to do so, it is unlikely that the Adjudicator would have come to a different conclusion. [66] It is at the end of the day a finding of fact on the part of the Adjudicator as to whether to accept the sum of RM7,165,102.31 as the Debit Notes that should be validly charged to the Claimant for rectification Works or the sum of RM8,337,180.59 as contended by the Respondent or any sum in between. It is a difference in quantum that can be corrected at the litigation that the Respondent has commenced. [67] In a very sense the Adjudicator is allowing the sum of RM7,165,102.31 to be allowed by way of Debit Notes deduction from the sum claimed by the Claimant had allowed part of the Defence of set-off 36 raised by the Respondent in their Adjudication Response and any unhappiness and quarrel has to do with quantum and that the Respondent has to wait for the outcome of the litigation already afoot in the Court. The denial of the Respondent to the Claimant’s Back Charges (Issue 4) [68] This is identified by the Adjudicator in his Decision as Issue 4. The Adjudicator was satisfied that these Back Charges were incurred by the Claimant for rectification works carried out by them for the Respondent’s Subcontractors. He took into consideration the Respondent’s denial that this sum was incurred as contended in the Adjudication Response. Though the reasons be brief, the Adjudicator did give his reasons for allowing this head of Claim after due regard being given to the Adjudication Response. At paragraph 27 of the Adjudication Decision he reasoned as follows: “27. In respect of Issue 4, I find that the Claimant in Schedule 7 to its Payment Claim has produced detailed correspondences supported by Material Requisition Forms (or Requisition Forms), photographic evidence and other documents, which the Respondent has not denied receiving in its Adjudication Response. I must therefore accept that these were duly received and despite the lapse of time to-date, there appears to be no 37 contemporaneous rejection of these claims. I therefore find in favour of the Claimant that the sum of RM384,526.29 is due and payable.” (emphasis added) [69] As the Respondent’s Defence to this head of Claim of the Claimant was a mere denial, the Adjudicator had found for the Claimant based on the documents adduced. This Court would go into the sufficiency of evidence as this is not an appeal and being findings of facts of the Adjudicator, this Court would not interfere. Retention Sum not due for release (Issue 2) [70] This is Issue 2 identified by the Adjudicator in his Decision. The only Defence raised in the Adjudication Response by the Respondent was that it was premature for the Retention Sum of RM588,781.35 to be released as the rectification works for the defects have not been attended to by the Claimant. The Adjudicator in giving his reasons for allowing the Retention Sum to be released to the Claimant, had correspondingly rejected the objections raised by the Respondent in their Adjudication Response. The Adjudicator had also found as a fact that the Defect Liability Period had long expired on 29.9.2015. The reasoning of the Adjudicator is in paragraph 24 of the Decision. He had exercised his powers under section 25(n) of the 38 CIPAA to decide and declare that the Retention Sum was due and payable despite the Respondent’s refusal to issue the Certificate of Making Good Defects (“CMGD”). [71] Under section 25(n) of the CIPAA, a plenary of powers is vested in the Adjudicator including the power to “(n) Decide or declare on any matter notwithstanding no certificate has been issued in respect of the matter.” Having also decided that the sum of RM7,165,102.31 is to be allowed as Debit Notes issued by the Respondent for the rectification Works, there was really no more justification for the CMGD not to be issued. [72] It would be apposite to affirm the advice of Akenhead J. in Cantillon Ltd v Urvasco Ltd [2008] EWHC 282 (TCC), Akenhead J relating to breaches of natural justice in adjudication cases after reviewing previous decisions: “57 From this and other cases, I conclude as follows in relation to breaches of natural justice in adjudication cases:

It must first be established that the Adjudicator failed to apply the rules of natural justice;

Any breach of the rules must be more than peripheral; they must be material breaches; 39

Breaches of the rules will be material in cases where the adjudicator has failed to bring to the attention of the parties a point or issue which they ought to be given the opportunity to comment upon if it is one which is either decisive or of considerable potential importance to the outcome of the resolution of the dispute and is not peripheral or irrelevant.

Whether the issue is decisive or of considerable potential importance or is peripheral or irrelevant obviously involves a question of degree which must be assessed by any judge in a case such as this.

It is only if the adjudicator goes off on a frolic of his own, that is wishing to decide a case upon a factual or legal basis which has not been argued or put forward by either side, without giving the parties an opportunity to comment or, where relevant put in further evidence, that the type of breach of the rules of natural justice with which the case of Balfour Beatty Construction Company Ltd v The Camden Borough of Lambeth was concerned comes into play. It follows that, if either party has argued a particular point and the other party does not come back on the point, there is no breach of the rules of natural justice in relation thereto.” (emphasis added) 40 [73] Overall, I am satisfied that the Adjudicator had considered the matters raised by the Respondent in their Adjudication Response and in particular the set-off raised, though brief his reasons may be and in spite of no submissions filed by the Respondent because as stated by the Adjudicator at paragraph 20 of his Decision, “the Respondent elected not to file submissions.” In the circumstance it cannot be said that the Adjudicator had not acted independently or impartially and nothing that the Adjudicator had done or failed to do come close to this ground of setting aside provided under section 15(c) of the CIPAA for having not acted independently or impartially. Whether there should be a Stay of the Adjudication Decision until the disposal of the dispute in litigation in the Writ action already filed by the Respondent in Court [74] The more flexible approach preferred and propounded by the Federal Court in View Esteem (supra) would allow in cases “where there has been clear and unequivocal errors”; to use the expression at paragraph [79] of the Federal Court’s Decision, for the Court in hearing an application under section 16(1)(b) to allow a stay. [75] It must also be considered in the context that “a stay of the 41 [adjudication decision] ought not be given readily and caution must be exercised when doing so.” As observed at paragraph [82] of the said Federal Court’s Decision. At para [82] of the said judgment of the Federal Court it is stated that the “financial capacity of the contractor to repay” could be a factor but not the only factor to be considered. [76] Whilst the Respondent had fulfilled the threshold condition of obtaining a Stay in that a Writ action has been filed to decide fully and finally all issues that have arisen in the dispute between the parties, that threshold is only a mere trigger for the Court to consider exercising its discretion with respect to Stay. [77] It is not the “be all and end all” of the consideration for Stay of the Decision for otherwise it would be a carte blanche for all who have an Adjudication Decision against them to effectively get a Stay of the Decision by serving a Notice of Arbitration or to file a Writ against the successful Claimant. That would be to denude the CIPAA of its designed purpose of facilitating cash flow in the construction industry and promoting prompt payment for work done for which the contractor is already out of pocket. The construction scene is littered with sob stories of contractors who have to close shop or suffer liquidation because payments for work done or services rendered were delayed. 42 [78] I cannot say that this Adjudication contain clear and unequivocal errors such that a stay would be justified when looking at the justice of the case. The Respondent might well disagree with the Decision but this is where one must appreciate and affirm once again that rough and ready outcome of an Adjudication where there may well be some margin of error allowed so long as it does not materially affect the overall justice of the case bearing in mind the Interim finality of the Decision until the arbitration or litigation is concluded. [79] Meanwhile the contractor who has done the work has to be paid and to tell him that though the Adjudicator had decided the sum to be paid to him, that payment still could not come to him because there is a pending litigation or arbitration, would be to render sterile the scheme of statutory Adjudication specially and specifically put in place to address the perennial problem that payments delayed would be payments denied when the contractor needs it most to pay his workers and suppliers. Death whether by suffocation or strangulation because of cash flow problem or worse still of being pushed over the edge of financial precipice is most regrettable when it could be avoided. [80] From the evidence adduced I am not prepared to say that the Claimant’s financial position is such that one should be anxious as to 43 whether they have the capacity to pay back should the litigation be against them. The Claimant had exhibited their audited accounts for year ended 31.3.2013 and 31.3.2016. The balance sheet has improved substantially from 2013 and for 2016 it has a revenue of about RM23 million with a gross profit of about RM2.6 million with total assets of 15.8 million. [81] The Respondent’s concern that the Claimant’s new businesses are funneled into new companies and that monies in the Claimant’s Account are used for repayment of bank borrowings are misplaced. It is for the Claimant to decide on how to structure their business whether by way of newly incorporated companies to undertake new ventures or otherwise. Payments to banks are to be expected as they would be in default if they do not do so. [82] As these were not concerns of the Respondent when appointing the Claimant as their contractor by way of a Letter of Acceptance dated 25.10.2012 and as the financial position has improved from an asset base of RM1.9 million in 2013 to RM15.8 million, there is confidence engendered with improved financial standing through the years in spite of non-payment of the Adjudicated Sum of RM2,729,871.73 due since 24.10.2015 when the Claimant submitted its Final Claim No. 20. 44 [83] There is thus no justification for Stay of the Adjudication Decision. Pronouncement [84] In the upshot I would dismiss the application for setting aside and also the stay application with costs of RM10,000.00 and correspondingly I would allow the enforcement of the Adjudication Decision with costs of RM5,000.00. Dated: 22 December 2017. - signed - Y.A. LEE SWEE SENG Judge Construction Court Kuala Lumpur For the Plaintiff in the Enforcement : Lam Wai Loong and Serene OS WA-24C-69-04/2016 : Hiew For the Defendant in the Setting Aside : (Messrs Harold & Lam OS WA-24C-90-05/2016 : Partnership) For the Defendant in the Enforcement : Watson Peters together with OS WA-24C-69-06/2016 : Farah Azaliya and Kenny For the Plaintiff in the Setting Aside : Tan Cheng Yee OS WA-24C-90-05/2016 : (Messrs Peters Chambers)