1. ) Tyl Land and Development Sdn Bhd v 1. ) Sis Integrated Sdn Bhd (WA-24C-109-07/2017 & WA-24C-121-07/2017)

Progress Payment Claim No 1 31.3.2016 1,735,746.81 104,144.81 1,839,891.62 2. Progress Payment Claim No 2 3.5.2016 847,512.05 50,850.72 898,362.77 3. Progress Payment Claim No 3 6.6.2016 1,013,885.24 60,833.11 1,074,718.35 4. Progress Payment Claim No 4 20.6.2016 264,908.74 15,894.52 280,803.26 6 5. Progress Payment Claim No 5 27.7.2016 754,132.86 45,247.97 799,380.83 Total 4,616,185.70 276,971.13 4,893,156.83 [10] In view of the issuance of the said Progress Certificates, TYL Land made the following payments totaling RM3,600,435.51 to the Defendant. i) A sum of RM516,972.00 paid on 5.5.2015; ii) A sum of RM999,991.52 paid on 6.5.2016; iii) A sum of RM1,678,541.95 paid on 17.6.2016; and iv) A sum of RM 404,930.04 paid on 17.8.2016. Problem [11] TYL Land said it was faced with numerous defects and poor workmanship in the course of the project. It was said that SIS had accepted that there was this persistent problem with defects in its works and that it was for this reason that it had allowed TYL Land to deduct from its interim certificates 3, 4 and 5 (which are the subject of this Adjudication). According to TYL Land, SIS had by its letter dated 22.8.2016, issued an undertaking to rectify the defects outlined. TYL Land’s stand is that the Letter of Undertaking was issued notwithstanding that Interim Certificates 7 3, 4 and 5 were not paid in full at that point. Then, on 1.9.2016, the architect issued a certificate of practical completion dated 22.8.2016 (“CPC”), based on SIS’s undertaking that the defects stated in the Letter of Undertaking will be rectified. The architect further conducted a site inspection on 5.9.2016 and recorded that SIS had not rectified the defects stated in the architect’s letter dated 15.8.2016. This was recorded in the architect’s letter dated 6.9.2016. [12] Meanwhile, by a letter dated 25.10.2016, the architect informed SIS that the timeline of 21 days from the date of notice dated 29.8.2016 had lapsed and that it will proceed to effect the set off for defects. [13] TYL Land issued a letter dated 3.11.2016 to record SIS’s failure to rectify the defects and that it had breached the Letter of Undertaking. They also informed SIS that the costs of rectifying the defects will be charged to them. [14] By its letter dated 30.12.2016, the architect wrote to SIS that the TYL Land had engaged a third party contractor to rectify the outstanding defects and the costs of rectification is RM3,186,000.00. [15] SIS on the other hand, issued a letter dated 14.10.2016 to demand payment for Certificate No. 3, 4 and 5 and notified TYL Land that it will suspend work in the event that no payment is made within 14 days. By its 8 letter dated 17.02.2017, SIS stated that it had made good the defective work within the defect liability period. This was denied in the architect’s letter dated 8.3.2017, as the CPC was issued on the condition that the defects stated in the Letter of Undertaking are to be rectified. [16] Subsequent to the CPC, SIS had forwarded a Progress Claim No 7 (Rev.2) for a sum of RM675,494.45 to TYL Land for works carried out up to 30.8.2016. Nevertheless, the said Progress Claim was not valued nor certified by TYL Land. [17] On or about 28.10.2016, the SIS had issued a letter demanding TYL Land to pay a sum of RM1,292,721.32 for the amount outstanding in relation to the Interim Certificates No. 3, 4 and 5. [18] TYL Land did not agree to the demand and as no payment were made by them, SIS commenced the statutory adjudication proceedings under CIPAA. The Proceedings in Adjudication [19] On 20.12.2016, SIS as Claimant in the Adjudication, issued and served its Payment Claim pursuant to Section 5 of the CIPAA on TYL Land, as Respondent in the Adjudication. The Claimant claimed for: i. Outstanding payments for work done as certified in Interim Certificate Nos. 3, 4 and 5 in the sum of RM1,292,721.32. 9 ii. Payment for work done and release of one moiety of Retention Fund under Progress Claim No. 7 (Rev. 2) in the sum of RM675,494.45. iii. And interest of 5% per annum from the date when the Certificates are due to be paid. [20] The total sum claimed by the Claimant was for RM1,968,215.77 (sum claimed in the Payment Claim) from the Respondent. [21] On 3.1.2017, the Respondent issued and served its Payment Response pursuant to Section 6 of the CIPAA on the Claimant. The Respondent denied the claim for inter alia the following reasons: i. The Claimant had failed, refused and/or neglected to rectify the defects discovered during the construction stage (defects identified before the issuance of the CPC). ii. The Claimant had failed, refused and/or neglected to rectify the defects discovered during the defect liability period. iii. The Claimant had agreed to the withholding of payments due under the Interim Certificates until the rectification works are done. 10 [22] The Respondent further filed in the Payment Response set-offs in the sum of RM3,186,000.00 being the rectification cost for the Claimant’s defective works. [23] An Adjudicator was appointed by the KLRCA and directions were given by the Adjudicator on the submissions of the Adjudication Claim, Adjudication Response and Adjudication Reply. [24] The Claimant in its Adjudication Reply raised 2 jurisdictional challenges in respect of the Respondent’s defences raised in the Adjudication Response. The Claimant had submitted that the defence of waiver and the defence of non-compliance with the contract provision pertaining to Progress Claim No 7 (Rev. 2) was not raised in the Respondent’s Payment Response and as such, the Adjudicator did not have jurisdiction to consider the such defences. [25] Upon the conclusion of the exchange of all the Adjudication submissions, on 8.5.2017, the Respondent’s solicitors had written to the Adjudicator seeking leave to put in written submissions to reply to alleged legal arguments which the Respondent did not have the opportunity to address. [26] However, the Adjudicator did not accede to the Respondent’s solicitor’s request. By way of a letter dated 9.5.2017, the Adjudicator 11 declined the Plaintiff’s request and inter alia, reasoned that “all the submissions before me are clear for me to make my decision”. [27] On or about 1.6.2017, the Adjudicator published his written decision where, inter alia he agreed with the 2 jurisdictional challenges by the Claimant and dismissed the Respondent’s defence of set off. Therefore, the Adjudicator ordered that: i) The Respondent is to pay the Claimant the sum of RM1,761,106.68 as the Adjudicated Sum; ii) The Adjudicated Sum shall be paid on or before 1.7.2017 in a form of secured financial instruments failing which 5% interest shall be imposed on the Adjudicated Sum until full settlement; iii) The Respondent’s set-off is dismissed; and iv) The Respondent shall bear RM90,778.94 being the full cost of the Adjudication. Prayers [28] TYL Land’s present application to set aside the Adjudication Decision is premised on the Adjudicator taking an unduly narrow and restrictive reading of TYL Land’s Payment Response, resulting in the Adjudicator refusing to consider a dispute on the ground of waiver with respect to the outstanding payment for Interim Certificate No’s. 3, 4 and 5. TYL Land 12 contended that its Payment Response did in fact set out the facts on which this dispute was premised but that inexplicably, the Adjudicator found that this was not raised. [29] TYL Land further argued that the Adjudicator failed to consider if SIS’s Payment Claim for Progress Claim No. 7(Rev.2) submitted after CPC was in compliance with the very contract relied upon by the SIS as Claimant in the Adjudication or as contended by TYL Land in its Adjudication Response that the said Claim should be part of Final Account Claim. [30] Notwithstanding TYL Land making an application to address arguments in this regard, which were raised for the first time in the Adjudication Reply, the Adjudicator refused to allow further submissions. [31] These, TYL Land, argued were a breach of natural justice justifying the setting aside of the whole of the Adjudication Decision. [32] The parties shall be referred to as TYL Land and SIS or as Claimant and Respondent respectively as they were so referred in the Adjudication. Principles [33] The first port of call for an aggrieved party to set aside an adjudication decision is to bring its case within either one of the 4 limbs as provided under section 15 of the CIPAA. 13 [34] Section 15 of the CIPAA reads as follows: “15. Improperly Procured Adjudication Decision 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.” [35] As has often been stated, a Setting Aside Application ought not to be treated as an appeal nor as a judicial review of the said Decision. Therefore, the merits or otherwise of the Adjudication Decision are rarely a factor for the determination of the Setting Aside Application, unless it can be showed that the conditions in section 15 have been met. [36] The Respondent had applied to set aside the Adjudication Decision under section 15 (b) and/or Section 15 (c) of the CIPAA, i.e there is a breach of natural justice and/or the Adjudicator had not acted independently or impartially. As there was no evidence pointing to a lack of independence or impartiality on the part of the Adjudicator and as the 14 Respondent had not submitted on this ground, this Court would focus on the ground of a breach of natural justice. [37] The grounds canvassed by the Respondent to set aside the Adjudication Decision can be summarized as follows: a. The Adjudicator had failed to consider the defence of waiver; b. The Adjudicator had failed to consider the defence of the Claimant’s failure to comply with the contract provision pertaining to the Progress Claim No. 7 (Rev.2); and c. The Adjudicator had refused the Respondent’s application for further submissions after the conclusion of the documents filed. Whether there was a breach of natural justice when the Adjudicator declined to consider the Defence of waiver which facts were set out in the Payment Response and which Defence was specifically raised in the Adjudication Response [38] I agree with learned counsel for the Respondent that in the Payment Response, the Respondent TYL Land, had set out the facts forming the basis of the defence of waiver. The following paragraphs in the Payment Response are in relation to the Respondent’s defence of waiver: “3.1 Even during the course of your works, defects in your works had been identified. It was for the reasons that you accepted the fact 15 that we had to withhold the progress payments to you towards these defective works that you have yet to rectify.

3.2 Thus, when you requested for practical completion to be certified under the contract, you agreed that the Certificate of Practical Completion, would be conditional. By your Letter of Undertaking dated 22 nd August 2016, you agreed and undertook to rectify defects in the list of defects issued by the Engineers and the Architect.

3.3 However and notwithstanding your Letter of Undertaking and your contractual obligation, you failed, refused and /or neglected to carry out the defects rectification works.

3.4 Further and in this connection, you were required to rectify the defects stated in the Engineers’ instructions dated 23rd August 2016 issued by the engineers. These defects were made known to you during a joint inspection on 22 nd August 2016. Thus, at all material time, you were aware that there are outstanding defects in your works, notwithstanding the issuance of CPC for your works.

3.5 It is evident from the fact that you issued the Letter of Undertaking to rectify the defects, notwithstanding that we withheld your previous progress payments that you knew and accepted 16 that there were serious defects in your work ... or which required your commitment to rectify” [39] In accordance with the Payment Response, the Respondent at paragraphs 42 and 43 of the Adjudication Response raised the defence of waiver. “42. The conduct of the Claimant, as summarized at paragraph 6 above, amounts to a waiver of any contractual entitlement the Claimant may have to payment on Interim Certificates Nos.3, 4 and 5.

In fact, the Claimant’s assertion that it is entitled to suspend works under Clause 30.7 of the Amended PAM Contract is an afterthought. It must be noted that the Interim Certificates which the Claimant alleges are outstanding were issued prior to the Letter of Undertaking.

43.1 By the Letter of Undertaking, the Claimant had nevertheless given an undertaking to rectify the defects. At that stage, if Claimant is correct that Interim Certificates were outstanding, then the Claimant obviously gave the undertaking, knowing and notwithstanding that the Interim Certificates were outstanding. 17 43.2 As such, by its conduct, the Claimant had waived its right rely on those alleged outstanding Interim Certificates to suspend its works.” [40] The Respondent summarized the conduct of the Claimant referred to in the above paragraphs as follows:

The Claimant accepted that the Respondent could withhold part of the monies certified under Interim Certificate No.3 onwards, towards addressing the defects listed by the architect.

This is consistent with the Claimant’s conduct in accepting payment of Interim Certificates Nos.3, 4 and 5 without protest and then proceeding to issue the Letter of Undertaking.

In fact, the CPC was issued by the Architect on the basis of the undertaking given by the Claimant.

It is pertinent to note that, up until this date of the Letter of Undertaking, there are no records of the Claimant demanding payment.

The conduct of the Claimant at the material time therefore is consistent with a contractor that had agreed for full payment on Interim Certificates Nos.3, 4 and 5 to be deferred pending 18 rectification of its defects, and inconsistent with a contractor who maintained a claim over those interim certificates. [41] Learned counsel for the Respondent submitted that notwithstanding that the Respondent had raised the necessary facts and the defence of waiver in the Payment Response, the Claimant, in its Adjudication Reply, submitted that the defence of waiver is outside the Adjudicator’s jurisdictions as it was not raised in the Payment Response. In the circumstances, the Claimant submitted that the Adjudicator need not consider the defence. [42] By the Respondent’s solicitors’ letter dated 8.05.2017, the Respondent requested directions to address this argument as this was raised for the first time in the Adjudication Reply. [43] Looking at what has been set out as the relevant facts giving rise to a waiver of the need to make payments pursuant to a Payment Claim under Certificates No. 3,4 and 5, I would say that even though the words “waiver”or “estoppel” are not expressly used, the reasons for disputing the sum claimed, have been clearly set out. [44] It must be noted that the process and proceeding in the CIPAA are meant to be simple and short of the sophistication that would normally accompany documents filed in a normal litigation or arbitration process. In 19 fact the word “Defence” is not used in section 6(2) of the CIPAA and it is set out below: “(2) A non-paying party who disputes the amount claimed in the payment claim, either wholly or partly, shall serve a payment response in writing on the unpaid party stating the amount disputed and the reason for the dispute.” (emphasis added) [45] As can be seen, the expression “the reason for the dispute” is used in place of the word “defence” and deliberately so in avoiding the technicalities that would often accompany the drafting of court documents as in the pleadings. [46] Furthermore there is no need for a lawyer to serve a Payment Claim or a Payment Response and even after the commencement of Adjudication with the service of a Notice of Adjudication under section 8(1) of the CIPAA it is allowed under section 8(3) for the parties to represent themselves or by their appointed representatives. [47] This is a marked difference with litigation where a company has to be represented by an advocate and solicitor. The rationale is not difficult to find; it is to avoid being over technical and to make the process and proceeding as simple as possible and with considerable costs saving as 20 there is no need to engage an advocate and solicitor to serve the documents and to be at the hearing of the Adjudication. [48] Therefore this Court would be similarly guided to guard against being unduly legalistic and lost in the labyrinth of pleadings with its various pitfalls for those less proficient with legal jargon and hence having the proclivity of being lost in the legal jungle. [49] This Court had occasion to consider a similar objection raised in PCP Construction Sdn Bhd v Leap Modulation Sdn Bhd and other suits [2017] MLJU 905 as follows: “[42] The Respondent had given some reasons for disputing the amount claimed in the Payment Claim and as required in section 6(2) the non-paying ‘shall serve a Payment Response in writing in the unpaid party stating the amount disputed and the reasons for the dispute.’ [43] It is true that a specific amount is not stated with respect to the amount disputed and one can suppose that the entire amount is disputed for even in a case where the Payment Response is not served, the non-paying is deemed to have disputed the entire Payment Claim under section 6(4) CIPAA. In fact, paragraph 2 of the Payment Response reads as follows: ‘We write to dispute your entire 21 claim for the sum of RM1,821,680.60 vide the Payment Claim premised on the following:...’ [44] CIPAA does not expect parties to frame their claims and defences of set-off in precise legal language and the lament from the industry is that the Payment Claim, Payment Response as well as the subsequent Adjudication Claim, Adjudication Response and Adjudication Reply have run into pages after pages of legalese. [45] The procedure and proceedings were supposed to be simple such that even legal representation is not necessary as stated in section 8(3) CIPAA as follows: ‘A party to the adjudication proceedings may represent himself or be represented by any representative appointed by the party.’ [46] The choice of language is apparent as we are only too familiar that in a court proceeding in litigation, a company invariably has to be represented by solicitors and by and large, parties in an adjudication would be companies incorporated under the Companies Act 1965 or the new Companies Act 2016. [47] The intent is that the procedure should be simple and not complicated, swift and not unnecessarily detained by technical legal objections and in plain language so that a party not 22 represented by solicitors would not have to wade through a legal labyrinth; trying to figure out for instance the difference between a cross-claim that is or is not a set-off but more in the nature of a counter claim. [48] It is here that the perspicuity of the language used in section 6(2) is to be appreciated as follows: ‘A non-paying party who disputes the amount claimed in the payment claim, either wholly or partly, shall serve a payment response in writing on the unpaid party stating the amount disputed and the reason for the dispute.’ (emphasis added) [49] The legislature has avowedly avoided the legal term of a ‘defence, set-off, cross-claim’. Nothing could be simpler and less intimidating than the expression ‘the reason for the dispute.’” (emphasis added) [50] The reasons for disputing the Payment Claim have been given and they are more than germane, and indeed grounded on the allegation that the Claimant had accepted the fact that payments would not be made under those Certificates until the defects are rectified and following that a Letter of Undertaking was issued by the Claimant to that effect. The Letter of Undertaking from the Claimant was issued after the Certificates No. 3,4 and 5 had become due, further supporting what the Respondent contended 23 to be the Claimant’s agreement that the rectification works had to be done for otherwise the Respondent would set-off the amount claimed in the Certificates. [51] Whether or not that is true and the reasons given are reasonable and valid are matters that the Adjudicator had to consider and decide accordingly. The Claimant said that there was no consent whether in writing or by conduct on its part that could have amounted to waiver. That, I am afraid, is for the Adjudicator to make his finding of fact. Under Section 27(1) of the CIPAA, the Adjudicator is obliged to consider the matters which were raised in the Payment Claim and Payment Response. [52] I agree with the Respondent that notwithstanding that the facts in respect of waiver were raised in the Payment Response, the Adjudicator went on to decide that it was not raised in the Payment Response and did not consider the merits of the defence altogether. The Adjudicator in paragraph 46) of his Decision categorically excluded the defence of waiver altogether as follows: “46) I will not deal with the defence of waiver in this decision as this was not raised in Payment Claim and Payment Response. I should confine my decision to whether or not the Interim Certificate No.3, 4 and 5 are valid and due for payments.” (emphasis added) 24 [53] The Adjudicator had therefore wrongfully and erroneously restricted his own jurisdiction and breached natural justice when he refused to allow a dispute that had been properly raised in the Payment Response – i.e. of waiver – to be considered. [54] Even if for the sake of argument, it is accepted that the defence of “waiver” or “estoppel” was not properly and specifically raised in the Payment Response, it cannot be denied that it was raised in the Adjudication Response. Even assuming that such a defence was raised for the first time in the Adjudication Response, it still has to be considered by the Adjudicator. The position of the law has been clarified by the Federal Court in View Esteem Sdn Bhd v Bina Puri Holdings Berhad [2017] 8 AMR 167 where it was held as follows: “[55] By section 27(1) of CIPAA, the arbitrator’s jurisdiction “is limited to the matter referred to adjudication” pursuant to ss 5 and 6 of the CIPAA. It refers to the “identification of the cause of action” in relation to the construction contract as required under s 5(2)(b) of the CIPAA. In turn, the payment response under s 6 of CIPAA is defined and limited by the claim under s 5 of the CIPAA. [56] In short, s 27(1) of CIPAA refers to the subject matter of the claim under s 5 of the CIPAA, which is the “cause of action” identified by the claimant by reference to the applicable clause of the 25 construction contract. Thus if the payment claim relates to progress claim No. 28 (as in the present case) the jurisdiction of the adjudicator is limited to this progress claim and nothing else. The payment response is likewise limited to an answer to progress claim No. 28. [57] It can thus be said that the appellant’s case regarding the jurisdiction referred to in section 27(1) of the CIPAA, is the subject matter of the claim and the cause of action as that identified under the relevant provision of the construction contract. By s 27(2) of the CIPAA, the parties may by consent extend the jurisdiction of the adjudicator to cover other matters. A typical example will be that of other progress claims falling due before the adjudication commences. Section 27(1) of the CIPAA has nothing to do with the grounds of the claim or the reasons for opposing the claim. [58] In contrast to jurisdiction, the “powers” of the adjudicator are listed in ss 25 and 26 of the CIPAA under the specific heading of “Powers of the adjudicator”. It follows that an adjudicator may exercise all or any of the powers under ss 25 and 26 of the CIPAA so long as he keeps within his jurisdiction in adjudicating only the subject-matter referred to him pursuant to sections 5 and 6 of CIPAA. 26 [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 the CIPAA, and all the grounds of defence in an adjudication response under s 10 of the CIPAA.” (emphasis added) [55] The Federal court speaking through Zulkefli Ahmad Makinudin PCA concluded thus: “[74] For the reasons above stated it is our considered view that an adjudicator is not excluded from considering all the defences raised by a respondent in the Adjudication Response whether found in the first response under s 6 of the CIPAA or not. In the circumstances of this case, the adjudicator had acted in breach of natural justice in excluding and refusing to consider certain defences raised by the appellant, and his decision cannot stand for that reason.” (emphasis added) [56] Granted the benefit of this decision of the apex Court was not available to the parties when the argument on jurisdiction was raised in the Adjudication and also in the Setting Aside Application. Be that as it may this Court is obliged to declare the position of the law as expounded by the 27 apex Court and it is not stated that the decision is only of prospective application. [57] At any rate when the brief grounds of judgment were given on 5.9.2017 before the delivery of the decision in View Esteem (FC) (supra) this Court had already held that the reasons for disputing the Payment Claim was clearly set out in the Payment Response though the word “waiver” was not used and hence it falls into the third category of cases referred to by Justice Coulson in Pilon Ltd v Breyer Group Plc [2010] EWHC 837 (TCC) where the Adjudicator had unduly and erroneously restricted his own jurisdiction and thus fell into a breach of natural justice as a result. Justice Coulson explained the third category as follows: “17. An adjudicator can make an inadvertent mistake when answering the question put to him, and that mistake will not ordinarily affect the enforcement of his decision: see Bouygues (UK) Ltd v Dahl-Jensen (UK) Ltd [2000] BLR 49. If, on the other hand, he considers and purports to decide an issue which is outside his jurisdiction, then his decision will not be enforced: see the discussion in Sindall Ltd v Solland [2001] 3 TCLR 712. But there is a third category, which is where the adjudicator takes an erroneously restrictive view of his own jurisdiction, with the result that he decides not to consider an important element of the dispute that has been 28 referred to him. This failure is usually categorised as a breach of natural justice. .....”(emphasis added) [58] The Federal Court in View Esteem (supra) commended the decision of Justice Coulson for a close reading with respect to the dicta below in Pilon’s case (supra): “24. It seems to me clear beyond doubt that the adjudicator erred in failing to take into account Breyer’s defence by reference to the over-payment on batches 1-25. Whilst he was quite correct to regard the notice of adjudication as setting out the boundaries of his jurisdiction, he failed to appreciate that what Pilon were seeking by that notice was not only an interim valuation of batches 26-62, but also an interim payment of any sum considered owing to them. Whilst the valuation required him to have regard to batches 26-62 only, the concomitant claim for payment meant that the adjudicator was obliged to consider whether Breyer were right to say that a much smaller net payment was due than that contended for by Pilon, because Pilon had already been overpaid on batches 1-25. In other words, the notice of adjudication gave the adjudicator the jurisdiction to consider what, if any, further sum should be paid by way of interim payment from Breyer to Pilon and that issue, of necessity, involved a 29 consideration of Breyer’s defence based on the alleged over-payment on batches 1-25.

It is not uncommon for adjudicators to decide the scope of their jurisdiction solely by reference to the words used in the notice of adjudication, without having regard to the necessary implications of the words: that was, for example, what went wrong in Broadwell. Adjudicators should be aware that the notice of adjudication will ordinarily be confined to the claim being advanced; it will rarely refer to the points that might be raised by way of a defence to that claim. But, subject to questions of withholding notices and the like, a responding party is entitled to defend himself against a claim for money due by reference to any legitimate available defence (including set-off), and thus such defences will ordinarily be encompassed within the notice of adjudication.

As a result, an adjudicator should think very carefully before ruling out a defence merely because there was no mention of it in the claiming party’s notice of adjudication. That is only common sense: it would be absurd if the claiming party could, through some devious bit of drafting, put beyond the scope of the adjudication the defending party’s otherwise legitimate defence to the claim. 30

I understand that it may be tempting for a claiming party in an adjudication to seek to limit the adjudicator’s jurisdiction in a way in which that party believes to be to its advantage. I am in no doubt that is what happened here: Pilon did not wish the adjudicator to have any regard to batches 1-25, and therefore deliberately limited the scope of the adjudication notice to batches 26-62. It was their case that the over-payment claim was outside the adjudicator’s jurisdiction, and that is what they (successfully) urged on the adjudicator. Thus, this is a case where Pilon sought a tactical advantage by putting forward an erroneous statement of the adjudicator’s jurisdiction and, as the decision in Quartzelec shows that can be a dangerous tactic to adopt.

In the result therefore, I consider that the adjudicator deliberately placed an erroneous restriction on his own jurisdiction, which amounted to a breach of natural justice.....” (emphasis added) [59] There is no necessity to expressly use the word “waiver” or “estoppel” in the Payment Response. In the Federal Court case of Boustead Trading

Sdn. Bhd. v Arab-Malaysian Merchant Bank Berhad [1995] 3 MLJ 331 the Defence of estoppel was not pleaded but evidence was led at trial without objection by the opposing party. Even under the ordinarily strict rules of pleadings governing civil procedure in courts the Defence was 31 allowed. For a less stringent requirement under Adjudication with less sophistication and greater simplicity and flexibility, there should be no obstacle to accept the reasons of waiver and estoppel as being validly raised for consideration of the Adjudicator. At pages 341-342 the Federal Court opined as follows: “Now it is quite correct to state that courts have in their decisions identified estoppel as a matter which requires to be pleaded under the rules of court. (See, Associated Pan Malaysia Cement Sdn Bhd v Syarikat Teknikal & Kejuruteraan Sdn Bhd [1990] 3 MLJ 287 at p 296). The operative rule is said to be O 18 r 8(1) of the Rules of the High Court 1980, although, in our view, r 7(1) of that Order is of equal importance because of the substantive law upon the subject of estoppel. These two rules read as follows: 7(1) Subject to the provisions of this rule and rules 10, 11 and 12, every pleading must contain, and contain only, a statement in a summary form of the material facts on which the party pleading relies for his claim or defence, as the case may be, but not the evidence by which those facts are to be proved, and the statement must be as brief as the nature of the case admits. 32 8(1) A party must in any pleading subsequent to a statement of claim plead specifically any matter, for example, performance, release, any relevant statute of limitation, fraud or any fact showing illegality –

which he alleges makes any claim or defence of the opposite party not maintainable; or

which if not specifically pleaded, might take the opposite party by surprise; or

which raises issues of fact not arising out of the preceding pleading. In our judgment, the requirement of these rules is sufficiently met if the material facts giving rise to the estoppel are sufficiently pleaded without actually using the term 'estopped'. (See, Lal Somnath Singh & Ors v Ambika Prasad AIR 1950 All 121 at p 131.) It may be desirable for a pleader to use that term; but it is not fatal if he does not. One must not lose sight of the object of modern pleadings which is to prevent surprise and to enable disputes to be litigated in an orderly fashion: Raja Abdul Malek Muzaffar Shah bin Raja Shahruzzaman v Setiausaha Suruhanjaya Pasukan Polis & Ors [1995] 1 MLJ 308 at p 320. Thus, although courts, through their pronouncements, require estoppel to be pleaded, there is also judicial recognition of 33 circumstances that may take a particular case out of the governing principle. First, there is the principle, already alluded to, that what requires to be pleaded are the relevant facts which a litigant claims to give rise to an estoppel and not any special formula in staccato: Laws Holdings Pty Ltd v Short (1972) 46 ALJR 563 at p 571. Secondly, even where a party has failed to set out the material facts in his pleading, but there is occasioned no surprise to his opponent, a court may, in the interests of justice, permit the point to be taken: Coppinger v Norton [1902] 2 IR 232 at p 243; Co-operative Town Bank v Shanmugam Pillay AIR 1930 Rang 265 at p 268; Laws Holdings. Useful reference may also be had to the instructive judgment of Edgar Joseph Jr J in Rosita bte Baharom & Anor v Sabedin bin Salleh [1992] 1 MLJ 379, affirmed by the Supreme Court in [1993] 1 MLJ 393. Thirdly, where there is no pleaded case of estoppel, but there is let in, without any objection, a body of evidence to support the plea, and argument is directed upon the point, it is the bounden duty of a court to consider the evidence and the submissions and come to a decision on the issue. It is no answer, in such circumstances, to say that the point was not pleaded: Oversea-Chinese Banking Corp Ltd v Philip Wee Kee Puan [1984] 2 MLJ 1.” (emphasis added) 34 [60] I am satisfied that the breach of natural justice is material and not minor, pronounced and not peripheral, in the circumstances of this case where the defence of “waiver” or “estoppel” was not considered at all as opposed to having been considered it and rejected it. It is not for this Court to second guess what the decision would have been if the Adjudicator had considered the said defence. Neither is this a case where this Court can proceed to say that had it been considered, the Adjudicator would have rejected it anyway. [61] In ACFM Engineering & Construction Sdn Bhd v Esstar Vision Sdn Bhd & Another Case [2015] 1 LNS 756, Mary Lim J stated that: “[53] I agree. It is not simply any breach or denial which will forestall the enforceability of the adjudication decision or be a ground for setting aside that decision. The breach must be "either decisive or of considerable potential importance to the outcome and not peripheral or irrelevant"; it must be material.” (emphasis added) [62] I agree with the Respondent that a defence of waiver is a valid defence to a claim in contract. In W J Alan & Co Ltd v El Nasr Export & Import Co [1972] 2 All ER 127 (“W J Alan”), Lord Denning MR held: “The principle of waiver is simply this: If one party, by his conduct, leads another to believe that the strict rights arising under the contract will not be insisted upon, intending that the other 35 should act on that belief, and he does act on it, then the first party will not afterwards be allowed to insist on the strict legal rights when it would be inequitable for him to do so - see Plasticmoda Soc. per Azioni v. Davidsons (Manchester) Ltd. [1952] 1 Lloyd 527, 539. There may be no consideration moving from him who benefits by the waiver. There may be no detriment to him by acting on it. There may be nothing in writing. Nevertheless, the one who waives his strict rights cannot afterwards insist on them”. [63] The above principle in W J Alan (supra) was endorsed by the Court of Appeal in Puncak Alam Housing Sdn Bhd v Menta Construction Sdn Bhd & Anor [2013] 1 LNS 148. [64] Learned counsel for the Respondent also referred to the case of Anthony Lawrence Bourke & Anor v CIMB Bank Bhd [2017] MLJU 771, where the Court held that: “[30] Having made its election to waive the DED and by continuing to disburse on the Agreement, the Respondent bank ought not to be allowed to take an absolutely opposite position in defence of its action. In our view this is a classic case of a waiver by conduct as decided in the Federal Court case of Boustead Trading (1985) Sdn Bhd v Arab-Malaysian Merchant Bank Bhd. [1995] 3 MLJ 311. It was 36 observed by the Federal Court through the judgment of Gopal Sri Ram JCA (as His Lordship then was) at page 348 of the judgment that when payment was made on the invoices without protest in that case, a reasonable man in similar circumstanced would be entitled to assume that the there was no complaint on the same. Similarly the Appellants here would be entitled to assume that the Respondent bank had waived its right under Clause 3.4 of the Loan Agreement after DED, by its conduct. It would be most unjust for the Respondent to now suggest that, after paying four invoices, it can go back to Clause 3.4 to enforce its original right that it had at least on four occasions, waived.” (emphasis added) [65] The Respondent further referred to the case of Jia Min Building Construction Pte Ltd v Ann Lee Pte Ltd [2004] SGHC 107, a subcontractor had provided for progress payments on a monthly basis. During the course of the works because of the subcontractor’s cash flow problems, the plaintiff subcontractor requested the defendant main contractor to arrange progress payments on a half-monthly basis. The defendant agreed to the plaintiff’s request. Before the Court, the defendant argued that despite its acquiescence to the arrangement, it was not bound by it. The High Court held that the parties have varied the terms of the contract in so far as the timing of the progress payments were concerned. 37 [66] Further, in the case of Tan Wai Kok (formerly trading as TWK Skills Engineering Works) v Hart Engineering (Pte) Ltd [2005] SGHC 215, the plaintiff failed to object to deductions made against progress payments whenever the payments were made by the defendant. [67] The Court held that the case for an estoppel was made. It would be inequitable for the plaintiff to recover the deducted money since the plaintiff had accepted these payments without protest, continued to pay plaintiff on that basis and the defendant had acted to its detriment when the plaintiff did a volte-face by suing to recover for the money deducted. [68] In the present case, it was submitted that the conduct of the Claimant had led to the Respondent to believe that the Claimant would not enforce its contractual right under the Contract until the defects stated in the Letter of Undertaking and the defect list provided by the architect and engineers have been properly rectified. [69] Whether or not this is so is for the Adjudicator to decide bearing in mind that such a defence was properly raised before him. [70] The case of Pilon (supra) was referred to in the case of Syarikat Bina Darul Aman Berhad & Anor v Government of Malaysia [2017] MLJU 673. In that case, the Adjudicator had erroneously held that he had no jurisdiction under CIPAA to hear the Payment Claim consisting of “Loss 38 and Expense” Claim and dismissed this head of Claim notwithstanding that the dispute was submitted to him. The Court held that the Adjudicator’s decision not to hear a dispute properly submitted for his Adjudication amounts to a breach of natural justice. [71] In the case of PCP Construction Sdn Bhd v Leap Modulation Sdn Bhd and other suits [2017] MLJU 905, the amount raised as a set-off in Interim Certificate 19 was not specifically stated. The adjudicator took the position that she does not have the jurisdiction to decide on the set off raised. The Court held that the defence of set off was wide enough to cover the event certified by the architect in Certificate 19 and the claimant was not prejudiced because the certificate had been issued by the architect to the claimant before the service of the payment claim. In the circumstances, the adjudicator had wrongly and unduly diminished and restricted her jurisdiction to hear the set off in Certificate No.19 certified by the Architect and thus was in breach of natural justice. [72] I am satisfied that the Adjudication Decision with respect to this head of Claim in Certificates No 3, 4 and 5, arrived at without considering the defence of “waiver” or “estoppel” raised, was in breach of natural justice and must be set aside. 39 Whether there was a breach of natural justice when the Adjudicator failed to ensure that the Claimant’s claim in Progress Claim No. 7 (Rev. 2) met the requirement of the Contract [73] Learned counsel for the Respondent submitted that the Adjudicator failed to consider and appreciate that after the practical completion had been achieved and after CPC was issued, Clause 30.1 of the PAM Contract no longer applies. [74] It was argued that Progress Claim No.7 (Rev.2) which was made was premised on Clause 30.1, was however made after CPC. Progress Claim No.7 (Rev.2) thus failed to comply with the PAM Contract itself. [75] It was submitted by the Respondent that Clause 30.1 merely provides that the interim certificate shall be issued after CPC if the Architect finds that further work done should be certified. It was further argued by the Respondent that Clause 30.1 does not oblige the Architect to value any interim certificates put in after CPC. [76] The Respondent argued that if properly considered, the Adjudicator ought to have found that there was no contractual basis for Progress Claim No.7 (Rev.2). It was further contended that the Claimant ought to have failed even in the absence of any dispute in the Payment Response served 40 as the Respondent was deemed to have disputed this head of Payment Claim. [77] It was argued by the Respondent that since it had raised in the Adjudication Response the issue of the non-compliance by the Claimant of the contractual provision, the Adjudicator ought to have considered this defence raised. [78] Surely the pertinent question must be why the Architect was not certifying the Payment Application made by the Claimant for work done after the CPC has been issued. [79] Similarly the Respondent cannot take shelter as Employer from paying by relying on the Architect not certifying the Interim Claim as justifying no payment. [80] However, I am satisfied that the Adjudicator had nevertheless proceeded to consider whether the Claimant’s Payment Claim for this Progress Claim No. 7 (Rev 2) was made in accordance with the Contract and whether the Claimant was entitled to the claim of RM675,494.45 being the sum for work done (including one moiety of Retention sum) claimed under Interim Progress Claim No. 7(Rev.2) but not certified. In doing so the Adjudicator had considered in a very real sense whether this Progress Claim No.7 (Rev.2) should conclude in Final Account and not by way of 41 Interim certificate mechanism. In holding that the Claimant was entitled to this Progress Claim No.7 (Rev.2) only for the sum of RM468,385.36 the Adjudicator had invariably disallowed the defence that this sum is only claimable by way of Final Account. [81] The Adjudicator did not allow the release of the first moiety of the Retention Fund having found at paragraph 68) of his Decision that there were outstanding defects that the Claimant had undertaken to rectify had not been done yet. There were also various items of Variation Order which was not allowed by the Adjudicator because there were no relevant Architect’s Instructions (“AIs”) produced by the Claimant. [82] The Adjudicator meticulously went through each of the 33 items in this Progress Claim No. 7 (Rev. 2) at paragraph 72) of his Decision before allowing the sum of RM468,385.36. [83] That at the end of the day is a finding of fact. The Adjudicator had asked the right question as stated in “7. ISSUES” at paragraph 28) ii under Issue No. 2 as follows: “Whether or not the Claimant is entitled to recover the sum of RM675,494.45 being the sum for work done (including the release of one moiety of the Retention Fund) Claim under Interim Progress Claim No. 7 (Rev.2) but not certified. Or any appropriate sum.” 42 [84] In allowing the Claimant’s claim for Progress Claim No.7 (Rev. 2), the Adjudicator relied on Clause 30.1 of the PAM Contract. The Adjudicator reasoned as follows in his Adjudication Decision: “61) Clause 30.1 - Payment Application and Issuance of Architect’s Certificate, it is provided as follows: The Contractor shall submit a payment application at the Interim Claim Interval stated in the Appendix with complete details and particulars as required by the Architect, to enable him to consider and ascertain the amount to be included in an Interim Certificate. Upon receipt of the Contractor’s details and particulars, the architect shall within twenty one (21) days from the receipt of the Contractor’s application, issue an interim certificate to the Employer with a copy to the Contractors, and the Employer shall thereafter pay the amount certified to the Contractor within the Period of Honouring Certificates. Any failure by the Contractor to submit a payment application shall be deemed to be waiver of his contractual entitlement for that Interim Certificate, and the Architect may or may not issue an Interim Certificate under the circumstances. After the issuance of the Certificate of Practical Completion, Interim Certificates shall be issued as and when further amounts 43 are ascertained by the Architect as payable to the Contractor by the Employer. 62) Clause 30.1 of the PAM 2006 (WITHOUT QUANTITIES) expressly state that after the issuance of CPC, the Architect shall issue Interim Certificate as and when further amounts are ascertained and paid by the Employer. Accordingly, the operation of interim progress claim valuation and certification mechanism shall continue even after CPC, save for the certification period is changed to ‘as and when’ further amounts are ascertained by the Architect. 63) I am (sic) opined that the term ‘as and when’ should mean (to) act within a reasonable time. In my view, the contract certificate period of twenty one (21) days is a reasonable time for the Architect or Quantity Surveyor to ascertain a progress claim amount. I therefore hold that the Progress Claim No.7 (Rev. 2) should be ascertained, valued and certified by 23 September 2016 [2 September 2016 plus 21 days]. 64) The Claimant’s evidence (CBD-8, Schedule 4, Pages 1-60) shows that the Claimant has submitted a detailed progress claim, the Progress Claim No.7 (Rev 2) is supported by bills of quantities for the work done for contract works, Architect’s Instruction (“AI”) and 44 breakdown costs to substantiate the work done for some of the variations and summary indicating the nett claim and the calculation of the release of one moiety of Retention Fund....” (emphasis added) [85] No doubt some parts of his Decision appears to be couched in the language reminiscent of the pre-View Esteem (FC) (supra) regime where strict regard is being had to matters raised in the Payment Claim and Payment Response as is discernible from paragraphs 58) - 60) of his Decision. Be that as it may, I am satisfied that ultimately by holding that the Claim was rightly made under Clause 30.1 of the PAM Contract the Adjudicator did dispose of the defence that it was not made in accordance with the PAM Contract in that it could only be claimed under Final Account. [86] I have no good reason to disagree with the approach taken by the Adjudicator in arriving at his answer to the right question asked as to whether this Progress Claim No. 7(Rev. 2) is due for payment and if so, how much of it has been proved. His determination is not final and the point can be raised and canvassed again and afresh in a litigation or arbitration that parties may pursue for finality of the disputed claims. [87] Until then, for the scheme of Statutory Adjudication under CIPAA to work, parties must respect and honor the Decision made by the Adjudicator, though it may be less than perfect and a sort of rough justice where the refined version may be had only in litigation or arbitration. 45 [88] In PCP Construction Sdn Bhd v Leap Modulation Sdn Bhd and other suits [2017] MLJU 905, it was observed as follows: “[23] I agree with the Claimant that an adjudication decision cannot be aside on the grounds that:

the parties disagree with the adjudicator’s decision be it on the merits or on the assessment of the case or finding of facts or law by the adjudicator; and

(ii) the fact that this Court may have made a different finding on the issues of law or facts. [24] In the case of Bina Puri Construction Sdn Bhd v Hing Nyit Enterprise Sdn Bhd [2015] MLJU 941 paragraph 9, Justice Ravinthran Paramuguru J. held that: ‘... It must be noted that under CIPPA, there is no right of appeal against the decision of the Adjudicator which is interim in nature or of temporary finality only. Section 15 has provided limited grounds on which the decision of the Adjudicator may be set aside. Since an application under section 15 is not an appeal, the decision of the Adjudicator cannot be reviewed on merits… [12] ... As I said earlier, section 15 does not envisage that the decision of the Adjudication can be reviewed on its merits. 46 Therefore, it is immaterial if the Adjudicator had erred in his finding of facts.’ (emphasis added) [25] The same principle was echoed by Justice Mary Lim Thiam Suan J (now JCA) in ACFM Engineering & Construction Sdn Bhd v Esstar Vision Sdn Bhd and another case [2015] MLJU 1951 where her Ladyship held that: ‘[54] In one of the few adjudication cases that went on appeal, the Court of Appeal in Carillion Construction Limited v Devonport Royal Dockyard Limited [2005] EWHC 778 too, gave relevant insights as to the approach and attitude of the Courts in such matters. At paragraphs 85 and 86 of the judgment, the Court said: ‘85. The objective which underlies the Act and the statutory scheme requires the Courts to respect and enforce the adjudicator’s decision unless it is plain that the question which he has decided was not the question referred to him or the manner in which he has gone about his task is obviously unfair. It should only be in rare circumstances that the courts will interfere with the decision of an adjudicator. ...’ [55] Again, one finds the same refrain from the Court of Appeal. That these adjudication decisions are meant to be 47 complied with; and that it is only in ‘rare’ cases or where it is ‘plain that the question which he has decided was not the question referred to him or the manner in which he has gone about his task is obviously unfair’ that the Court should wade in to interfere. I agree that this is the right approach to adopt in relation to section 15 of CIPAA

2012.’(emphasis added) [26] In Econpile (M) Sdn Bhd v IRDK Ventures Sdn Bhd and another case [2017] 7 MLJ 732 at paragraph 72, I had also echoed the same principle, referring to the English case of UK Technology and Construction Court in Westwood Structural Services Ltd v Blyth Wood Park Management Co Ltd [2008] EWHC 3138 (TCC) which held that: ‘[13] The principles as to enforcement of adjudicators’ decisions are well known. They can be summarised as follows:

‘the objective which underlies the Act and the statutory scheme requires the courts to respect and enforce the adjudicator’s decision unless it is plain that the question which he has decided was not the question referred to him or the manner in which he has gone about his task is obviously unfair. It should be only in rare circumstances that the courts will interfere with the decision of an adjudicator’: see 48 para 85 of the judgment of Chadwick LJ in Construction Ltd v Devonport Royal Dockyard Ltd [2005] EWCA Civ 1358 104 ConLR 1;; [2006] BLR

15.

An error of fact or law will not invalidate an adjudicator’s decision. If the adjudicator has answered the right question in the wrong way, his decision will nevertheless be binding. It is only if he has answered the wrong question that his decision will be a nullity: see the Court of Appeal decisions in Bouygues (UK) Ltd v Dahl-Jensen (UK) Ltd [2001] 1 All ER (Comm) 1041, 73 ConLR 135,; [2000] BLR 522 and C & B Scene Concept Design Ltd v Isobars Ltd [2002] EWCA Civ 46, 82 ConLR 154;[2002] BLR 93 ’(emphasis added) [89] Appreciating that there would be a need to do some balancing of competing interests in the case of an Adjudication Decision which Decision has the element and effect of interim finality, there is a broad discretion vested in the Court under a section 16(1)(b) of the CIPAA to grant a stay of the Decision pending litigation or arbitration or a stay subject to terms under section 16(2). 49 [90] The Federal Court in View Esteem Sdn Bhd (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 grant a stay of an Adjudication Decision. [91] The Federal Court nevertheless hastened to add that “a stay of the [adjudication decision] ought not be given readily and caution must be exercised when doing so.” See paragraph [82] of the said Federal Court’s Decision. At paragraph [84] 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. [92] For the reasons given I would not disturb this finding of mixed fact and law as the Adjudicator had answered the right question and had given his cogent reasons for arriving at his Decision. There is no breach of natural justice as in answering the question so raised the Adjudicator had invariably disposed of the defence raised in the Adjudication Response that this Progress Claim No. 7 (Rev. 2) is only to be made at Final Account stage and rejected the same. [93] In fact the defence of payment in Progress Claim No. 7(Rev.2) is only to be made at Final Account stage cannot stand in the light of the finding of the Adjudicator that the payment under that Progress Claim issued after 50 CPC was validly made and payment ought to have been released to the Claimant after the Architect had certified within a reasonable time. [94] The fact that no Certificate had been issued by the Architect is no bar to the Claimant’s Claim as under section 25(n) it is provided that the Adjudicator shall have the powers to: “(n) Decide or declare on any matter notwithstanding no certificate has been issued in respect of the matter” Whether there was a breach of natural justice in the Adjudicator rejecting the Respondent’s request to file further submissions to respond to the jurisdictional challenge raised in the Adjudication Reply [95] The Claimant had raised in its Adjudication Reply served that jurisdictionally the Respondent should not be allowed to raise the issue of waiver with respect to Interim Certificates 3, 4 and 5 and non-compliance with the Contract with respect to Progress Claim No. 7(Rev.2). [96] The Respondent wrote to the Adjudicator for an opportunity to make submissions to address them. The Respondent’s request was later rejected by the Adjudicator in his letter dated 9.5.2017. [97] Learned counsel for the Respondent submitting that in refusing the Respondent’s request for further submissions, the Adjudicator erroneously 51 held that the Adjudication Reply was the final submissions. In this regard, he argued that the Adjudicator took an over simplistic approach, disregarding the Respondent’s right to further submit when there is new issue i.e. the jurisdictional challenge, raised by the Claimant in its Adjudication Reply. [98] He concluded that if the Adjudicator had given the Respondent the opportunity to address the two aforesaid jurisdictional challenges, the Adjudicator would have been appraised of the fact that these disputes raised by the Respondent - namely that the dispute of waiver and non-conformance of Progress Claim No.7 (Rev.2) to the Contract are matters that the Adjudicator ought in law to have considered. [99] I would agree with the Adjudicator that the CIPAA only allows for the following documents to be served after the service of a Notice of Adjudication by the unpaid party as Claimant, i.e. the Adjudication Claim by the Claimant, the Adjudication Response by the Respondent and the Adjudication Reply by the Claimant. [100] However under section 25(a) of the CIPAA the Adjudicator shall have the powers to— 52 “(a) Establish the procedures in conducting the adjudication proceedings including limiting the submission of documents by the parties;” (emphasis added) [101] Thus under section 25(a) the Adjudicator has the discretion to allow submissions to be put in by the parties on the issue of jurisdiction raised in the Adjudication Reply. As he had not allowed for submissions to be filed by either party, the Adjudicator cannot be faulted for being in breach of natural justice. [102] In this case it is more of a contingent jurisdiction in that the defence must be properly raised, at least in the Adjudication Response, and then the Adjudicator is duty bound to consider it. If the Adjudicator does not consider it then it is a breach of natural justice when that decision is deliberate resulting in the defence raised being disregarded altogether. [103] The Court thus had no problem holding that there had been a wrongful refusal to exercise jurisdiction with respect to hearing the defence of waiver raised for Interim Certificates No, 3, 4 and 5 and thus there had been a breach of natural justice. Likewise this Court had no difficulty considering afresh whether or not the Adjudicator had unduly restricted his jurisdiction when dealing with Progress Claim No.7 (Rev. 2) as in not in compliance with the PAM Contract and this Court had held that the Adjudicator had nevertheless decided on this defence raised when the 53 considered that the Progress Claim No.7 (Rev.2) was properly made in compliance with Clause 30.1 of the PAM 2006 (Without Quantities) and hence in compliance with the Contract. [104] Under section 25(f) the Adjudicator is further allowed to call for meetings with parties and under section 25(g) to conduct any hearing and limiting hearing time. [105] The Adjudicator here has the discretion as to whether to allow or refuse any further submissions or oral hearing on the matter notwithstanding the Respondent’s solicitor’s request. The Adjudicator had dealt with the Respondent’s solicitors request in paragraph 39) of his Decision, whereby he had held, inter alia, that the arguments in the Adjudication Reply are within the subjects raised in the Adjudication Response and there were no new issues raised in the Adjudication Reply. [106] The Adjudicator further found that all the submissions before him are clear for him to make a decision as stated in paragraph 39) of the Decision. Thus, having considered the Respondent’s solicitors request and having found that there is no necessity for further submissions, the Adjudicator could not be said to have committed any breach of natural justice. [107] The Court would be loathed to interfere with the discretion of the Adjudicator in deciding whether or not to allow further documents to be 54 served unless the procedure adopted is manifestly unfair or prejudicial to one party. [108] Here, the Adjudicator was satisfied that there was sufficient material before him to make a deliberation and to decide. Therefore, the exercise of the discretion is not unreasonable or in breach of natural justice and was well within the powers of the Adjudicator to decide. [109] It cannot be denied that as the issue of jurisdiction is with respect to contingent jurisdiction as in that if the defence had not been properly raised in the Payment Response and is raised for the first time in the Adjudication Response, it ought not to be considered. With the benefit of hindsight from the View Esteem’s (FC) case, it is now clear that the Adjudicator has jurisdiction to deal with the matter even though it is raised for the first time in the Adjudication Response. [110] For that kind of jurisdictional challenge, it can be raised at any time even before this Court in a setting aside Application under section 15 of the CIPAA. It does not hinder the Adjudicator from proceeding with the Adjudication and the matter can be taken up without the fear that the Respondent had somehow prejudiced its position by not having the opportunity to submit on it further. Section 27(3) of the CIPAA reads: 55 “(3) Notwithstanding a jurisdictional challenge, the adjudicator may in his discretion proceed and complete the adjudication proceedings without prejudice to the rights of any party to apply to set aside the adjudication decision under section 15 or to oppose the application to enforce the adjudication decision under subsection 28(1).” (emphasis added) [111] When raised at the stage of the Setting Aside Application, the Court is not bound by the finding of the Adjudicator as to whether he had or does not have jurisdiction. The Court must look at the matter afresh irrespective of how the Adjudicator had approached the matter of jurisdiction and to satisfy itself that indeed the Adjudicator had jurisdiction. In other words the Court is unfettered by the previous decision or non-decision of the Adjudicator when a jurisdictional challenge is raised. [112] An error on jurisdiction whether with respect to core or original jurisdiction, or as in this case, more of a contingent jurisdiction is such that it will not be condone. [113] As required of the Adjudicator under section 24(b) of the CIPAA, he shall act in a timely manner and avoid incurring unnecessary expense. He must have in mind the overarching purpose of the CIPAA in providing a speedy dispute resolution mechanism and an expedient disposal of a construction payment dispute. I agree with the Claimant that the process 56 ought not to be unnecessarily prolonged or protracted by having numerous legal arguments put forth for the Adjudicator’s determination. This is particularly so in matters of a jurisdictional challenge when the intent of Parliament under section 27(3) of the CIPAA seems to be that the Adjudicator should not be bogged down and detained by it other than in a clear cut case where the Court had earlier given some guidance and a similar challenge is then raised again before the Adjudicator. [114] I would therefore hold that there has been no breach of natural justice here with respect to not allowing the Respondent to submit further on the jurisdictional challenge raised in the Adjudication Reply and at any rate the matter, having been raised before this Court, it is no longer a live issue and indeed has become rather academic. Whether the part of the Payment Claim with respect to Interim Certificates No. 3, 4 and 5 set aside should be severed from the Payment Claim with respect to Progress Claim No. 7(Rev.2) allowed by the Adjudicator [115] It remains for the Court to consider whether the part of the Payment Claim set aside with respect to Interim Certificates No.3, 4 and 5 for the sum of RM1,292,721.32 should be severed from the part of the Payment Claim allowed by the Adjudicator for the sum of RM468,385.36 which sum 57 the Respondent failed to set aside in this Application or whether the whole of the Adjudication Decision should be set aside. [116] I had the opportunity to deal with a similar issue of severance in the case of PCP Construction Sdn Bhd v Leap Modulation Sdn Bhd and other suits [2017] MLJU 905. [117] It has been generally thought that once there is a breach of natural justice then the natural consequence is that the whole of the Adjudication Decision has to be set aside much like an arbitral award where it can be shown that there has been a breach of natural justice on the part of the learned Arbitrator. [118] However bearing in mind the purpose of the CIPAA in facilitating regular and timely payment and to provide a mechanism for speedy dispute resolution through adjudication, it would be rather wasteful of time and resources if in cases where one can sever the good from the bad, not to be able to save the Adjudication Decision with setting aside the part affected. [119] There has been substantial development in the jurisprudence in this area of law with respect to Adjudication. Guidance can be had to the approach of the English courts in Cantillon Ltd v Urvasco Ltd [2008] EWHC 282 (TCC) where Justice Akenhead reasoned with characteristic persuasion a case for severability in cases which justify it as follows: 58 ‘59. In Keating on Construction Contracts (8th edition) the following is said at Chapter 17-045: ‘It seems probable that if there is a breach of natural justice, the whole decision is unenforceable, and it is not possible to sever the good from the bad.’ In a footnote supporting this observation the following is said: ‘See RSL ( South West) Ltd-v-Stansell Ltd unreported (June 16, 2003), but also see the observations in Griffin-v-Midas Homes Ltd [2001] 78 Con LR 152. For a discussion of the issue of severability of adjudicators’ decisions generally, see Sheridan and Helps, ‘Construction Act Review’ [2004] 20 Const. LJ 71’.

I am by no means convinced that this observation in Keating (of great weight that it is) is correct. The case of Griffin and Another-v-Midas Homes Ltd [2000] 78 Con LR 152 is actually authority for the proposition that, where an Adjudicator has exceeded his jurisdiction, that part of the decision which was made within his jurisdiction can be enforced. It does not appear that the issue of severability as such was argued in that case or, as such, ruled upon by HHJ Lloyd, QC, who tried it.

The paper by Peter Sheridan and Dominic Helps in the Construction Law Journal is specifically about ‘Severability of 59 Adjudicator’s decisions’. The authors specifically addressed the issue as to whether an Adjudicator’s decision may be partly enforceable and partly not enforceable. They make observations on a number of cases: ...

The authors of this article conclude as follows: ‘On the basis of the cases decided so far, the following would appear to be the position on severability:

Where two or more disputes are referred to an Adjudicator, a valid objection to one decision, on jurisdiction or natural justice grounds, will not necessarily affect the validity and enforceability of the Adjudicator’s decision on the other dispute or disputes.

Where a single dispute is referred to one Adjudicator, it may not be severed so as to excise a part of the decision to which valid objection is taken, on jurisdiction or natural justice grounds, leaving the balance valid and enforceable. A decision on the single dispute is either valid and enforceable or invalid and not enforceable.

It follows that an Adjudicator’s decision may not be corrected to take account of a jurisdiction objection, with 60 the result that a sum larger than that in the Adjudicator’s decision may be enforced by a Claimant.

On the severability issue, I conclude, albeit obiter in the result, as follows: a. The first step must be to ascertain what dispute or disputes has or have been referred to adjudication. One needs to see whether in fact or in effect there is in substance only one dispute or two and what any such dispute comprises. b. It is open to a party to an adjudication agreement as here to seek to refer more than one dispute or difference to an adjudicator. If there is no objection to that by the other party or if the contract permits it, the adjudicator will have to resolve all referred disputes and differences. If there is objection, the adjudicator can only proceed with resolving more than one dispute or difference if the contract permits him to do so. c. If the decision properly addresses more than one dispute or difference, a successful jurisdictional challenge on that part of the decision which deals with one such dispute or difference will not 61 undermine the validity and enforceability of that part of the decision which deals with the other(s). d. The same in logic must apply to the case where there is a non-compliance with the rules of natural justice which only affects the disposal of one dispute or difference. e. There is a proviso to (c) and (d) above which is that, if the decision as drafted is simply not severable in practice, for instance on the wording, or if the breach of the rules of natural justice is so severe or all pervading that the remainder of the decision is tainted, the decision will not be enforced. f. In all cases where there is a decision on one dispute or difference, and the adjudicator acts, materially, in excess of jurisdiction or in breach of the rules of natural justice, the decision will not be enforced by the Court.’(emphasis added) [120] In the decision of UK Technology and Construction Court in Paice and another v MJ Harding (t/a MJ Harding Contractors) [2016] EWHC B22 (TCC), the Court held that: ‘Jurisdiction [64] The issue is whether the adjudicator had jurisdiction to determine the claimants’ entitlement to deduct the sum of £6,049.60 from the 62 amount otherwise due to the defendant on account of design provided by the claimants to the defendant in respect of House A, not forming part of the contract; if there was no jurisdiction, whether that part of the decision is severable. … [68] The adjudicator’s jurisdiction is derived from the adjudication agreement. Article 7 and cl 9.2 of the contract entitle either party to refer any dispute or difference arising under the contract to adjudication. The dispute in respect of the design fees did not arise under the contract; it arose, if at all, under a separate agreement. Therefore, the adjudicator did not have jurisdiction to determine the design fees dispute. … [70] However, that part of the adjudication decision can be severed from the other parts of the decision: Cantillon v Urvasco Ltd [2008] EWHC 282 (TCC), (2008) 117 ConLR 1, per Akenhead J at paras [63] and [76]. The defendant relies on the decision in Cleveland Bridge (UK) Ltd v Whessoe-Volker Stevin Joint Venture [2010] EWHC 1076 (TCC), (2010) 130 ConLR 159 to submit that the design fees issue cannot be severed but Cleveland can be distinguished on its facts. In that case, the adjudicator did not identify an alternative decision so as to identify the proportion that would 63 survive any excess of jurisdiction. In this case, the adjudicator identified and valued the design fees claim separately, so that there is no difficulty in severing that part of the award from the rest of the decision. [71] Accordingly, paras 3.245-3.263 of the adjudication decision are in excess of jurisdiction and are not enforceable but can be severed from the remainder of the decision.’ (emphasis added) [121] Likewise in the case of Bovis Lend Lease Ltd v The Trustees of the London Clinic [2009] EWHC 64 (TCC), the UK Technology and Construction Court held that: ‘[39] A further issue arises between the parties as to whether or not it is legally and practically possible to ‘sever’ the adjudicator’s decision if it be the case that he did have jurisdiction to address the dispute relating to delay, extension of time and the recovery of liquidated damages but did not have jurisdiction to address the loss and expense claim. … Discussion - severability [69] It follows from the above that, since the adjudicator had jurisdiction and there has been no breach of the rules of natural justice, the question of severability simply does not arise. If I had had to decide the point, I would only have done so on the basis that the 64 clinic had established its jurisdictional argument in relation to the loss and expense claim (which it has not). If I had formed the view that the adjudicator had simply, consciously, not given the clinic sufficient time to respond (within the constraints of the adjudication timetable available in this case), this would probably not have been a case which would have led to severance. However, on a jurisdictional basis, if I had formed the view that the crystallised dispute did not include the claim for loss and expense, I would have been of the view that that part of the decision which demonstrably related to the extension of time claim and the recovery of liquidated damages could be recovered. The award was one which was eminently severable. The adjudicator indicated clearly what ‘redress’ he was granting with regard to the extension and liquidated damages issues....’ (emphasis added) [122] In Australia too there has been a palpable paradigm shift in favour of severance. The Supreme Court of Victoria in Gantley Pty Ltd v Phoenix International Group [2010] VSC 106, discussed the doctrine of severance at great length and giving due regard to the over-arching purpose of the Act there. The Court therein reasoned as follows: ‘Is Severance of the Payment Claims Possible? ‘[95] In these matters, however, I did raise with counsel the possibility of severance, in the event that I found that part of the 65 payment claims, being the claims for variations, were described in adequate detail such that these components of the payment claims ought to survive, even if the balance of the claim in each case was to be declared invalid on the ground of non-compliance with s 14(3)(a). Accordingly, I heard argument on the point, which I will now address. … [114] It was submitted by Mr Robins, who appeared for the respondent, that severance should not be permitted because the Act did not permit this to occur. Either the progress claim was fully compliant in all of its facets, or it was not, it was argued. If one part of the progress claim did not satisfy the requirements of s 14(3)(a) the whole of the progress payment would therefore fail and should be set aside as being invalid. [115] I do not accept this submission. The question should be whether the Act, either expressly or impliedly, operates to exclude the common law doctrine of severance. I find that it does not. Indeed, the purposes and objects of the Act earlier described are best served by processes which, so far as possible, ought to accommodate reasonable flexibility and avoid unnecessary technicality. 66 [116] Severance in this case would operate to achieve the purpose and objects of the Act and would not operate to diminish the attainment of these goals. A respondent to a payment claim and an adjudicator, if appointed, should be able to assess the valid part of this progress claim which sufficiently describes the work for which payment is claimed, and provide a rational response or adjudication determination in respect of that part of the claim, and exclude from consideration that part of the claim which does not comply.’ (emphasis added) [123] Section 14(3) of the Building and Construction Industry Security of Payment Act 2002 of Victoria provides that: “A payment claim-a) must identify the construction work or related goods and services to which the progress payment relates;” [124] It makes a lot of sense where there are several heads of Claim in a Payment Claim to separate and sever that which is in compliance with the Act that which is not in compliance. In our present case it had been held that the Adjudication Decision with respect to Interim Certificates No. 3, 4 and 5 was given in breach of natural justice whereas that part of the Payment Claim which was allowed for Progress Claim No. 7 (Rev.2) was made within jurisdiction and that there had not been any breach of natural justice. 67 [125] This is a proper case where the unaffected part may be nicely and neatly severed and separated from the affected and infected part not unlike the separating of the wheat from the chaff. Here is where, having in mind the over-arching purpose of the CIPAA, we must not be unduly technical and to be swayed by form over substance. [126] In fact the Adjudicator himself has separated into 3 parts under 3 separate issues the Payment Claim of the Claimant in paragraph 101 of his Decision. [127] Much time and energy would have to be dissipated unnecessarily if the whole Decision has to be set aside when this Court had found nothing justifying the setting aside that part of Decision with respect to the sum of RM468,385.36 together with simple interest of 5% per annum after the last date for payment on 1.7.2017 until full payment. [128] To have to also set aside the part unaffected would be prejudicial to the Claimant who would have to proceed with Adjudication all over again and in the meanwhile could not proceed to enforce the part of the Adjudication Decision in its favour. Pronouncement [129] Therefore I had set aside only that part of the Adjudication Decision with respect to Interim Certificates No.3, 4 and 5 for the sum of RM1,292,721.32 together with the interest allowed. 68 [130] That part of the Adjudication Decision with respect to the sum allowed for Progress Claim No.7 (Rev.2) remains intact and unaffected i.e. the sum of RM468,385.36 together with the interest allowed. [131] As for costs, fees and expenses, it should correspondingly be reduced by 75% which is roughly the percentage that was set aside where the monetary sum is concerned. [132] Therefore the sums in paragraphs 105 (i), (ii) and (v) corresponding to the Adjudicator’s fees, KLRCA’s administrative fee and the Claimant’s legal fees shall be reduced by 75% accordingly. [133] After hearing parties on costs of this Setting Aside Application and seeing that it was the Claimant who had resisted this issue of jurisdiction, the Claimant shall bear some costs and the Court had ordered costs of RM5,000.00 to be paid by the Claimant here to the Respondent. [134] The Enforcement Application was adjourned to another date for hearing and correspondingly and consistent with the Setting Aside Order, the Enforcement Order was granted for the remaining Adjudicated Sum of RM468,385.36 together with the interest allowed and the Adjudicator’s fees, administrative fees and Claimant’s legal fees that had been reduced by 75% accordingly with the sum for Adjudication registration fee and Appointment of Adjudicator’s fees remaining intact. 69 [135] Each party shall bear their own costs with respect to the Enforcement Application. Dated: 15 February 2018. Signed YA LEE SWEE SENG Construction Court High Court Kuala Lumpur For the Plaintiff : Foo Joon Liang and Teoh Ting Wei in WA-24C-109-08/2017 : (Messrs Gan Partnership) and the Defendant in : WA-24C-121-07/2017 : For the Defendant : Henry Ngok and Ong Yan Hao in WA-24C-109-08/2017 : (Tetuan Au Yong, Ng & Ngok) and the Plaintiff in :