1. ) Zana Bina Sdn Bhd v 1. ) Cosmic Master Development Sdn Bhd (WA-24C-94-09/2016 & WA-24C-103-09/2016)

of the Act 746, Section 41 Specific Relief Act 1950 (Act 137) and Rule 7, Rule 15 Order 16, and other Rules under the Rules of Court 2012. BETWEEN COSMIC MASTER DEVELOPMENT SDN BHD (COMPANY NO: 406984-V) ... PLAINTIFF 3 AND ZANA BINA SDN BHD (COMPANY NO: 918580-W) ... DEFENDANT THE JUDGMENT OF YA LEE SWEE SENG Project [1] The Claimant in the Adjudication had been appointed by the Respondent vide a Letter of Award ("LoA") dated 15.5.2015 for the execution and completion of the “balance remaining works for Main Building Works, Infrastructure Works, M&E Works and Associated Works for Taman Seri Perdana Molek ("the Project"). [2] The Claimant is Zana Bina Sdn Bhd ("Zana Bina") and the Respondent is Cosmic Master Development Sdn Bhd ("Cosmic Master"). [3] The Project is an abandoned housing development project in Johor undertaken by Syarikat Perumahan Negara Berhad ("SPNB") who had awarded it to the Respondent to complete with its official description as follows: “Cadangan Pembangunan 6 Block Yang Mengandungi 112 Unit Rumah Pangsa Kos Rendah 700KP, 112 Unit Rumah Pangsa Kos Rendah 750KP, 160 Unit Rumah Pangsa Kos Rendah 850KP, 520 4 Unit Pangsapuri 1000KP, 30 unit Pangsapuri 2000KP, 24 Unit Kedai 850KP (Di Bawah Bangunan) serta Kemudahan Yang Terdiri Daripada 1 Unit Stesen Suis Utama (SSU), 4 Unit Pencawang TNB, 1 Unit Pondok Pengawal Dan 3 Unit Pusat Pengumpulan Sampah Secara Serah Balik Kurnia Semula Di Atas Lot 1158, 1991 Dan 2156, Mukim Plentong, Daerah Johor Bahru, Johor Darul Takzim” Payment Claim [4] The Claimant commenced work and by the time they were terminated by the Respondent, they had two outstanding claims. They served a Payment Claim dated 9.3.2016 on the Respondent for the combined sum of RM2,211,569.86 consisting of two parts; the first amount RM1,792,253.11 on a document identified as Valuation for Interim Certificate No.1 dated 5.11.2015 bearing both the signatures of the Architect and Quantity Surveyor ("QS") and the second claim for RM419,316.75 in the aggregate on a document identified as Valuation for Interim Certificate No.2 dated 28.12.2015 which bears the signature of the QS but not the Architect. [5] The basis of the Payment Claim was stated as “Section 36 Construction Industry Payment and Adjudication Act 2012 ("CIPAA") and/or Clause 30 of the PAM Contract 2006”, with the ‘Due Date for 5 payment’ 5.12.2015 and 27.1.2016 respectively. Page 2/4 of the Payment Claim reads as follows: Original Contract Sum: RM16,146,000.00 Attachment: Supporting Document of the Unpaid Party (“SD”) Total Claimed Amount: Description of works done for amount claimed Due date for payment Basis of Claim RM2,211,569.86 The unpaid works done under the Letter of Award for the balance remaining works for Main Building Works. Infrastructure Works, M & E Works and Associated Works dated 15.5.2015 with reference number CMD/TSMP/ ZBSB /150515 incorporating the scope of works and conditions of appointment as set out therein including the Agreement and Condition of PAM Contract 2006 (With Quantities) - Section 36 of CIPAA ; and/or - Clause 30 of the PAM Contract 2006 Valuation for Interim Certificate No 1 dated 5.11.2015.

5.12.2015 - Section 36 (4) of CIPAA ; and/or - Clause 30 of the PAM Contract 2006 Valuation for Interim Certificated No 2 dated 28.12.2015.

27.1.2016 - Section 36 (4) of CIPAA ; and/or - Clause 30 of the PAM Contract 2006 6 [6] There was no Payment Response. In the Notice of Adjudication issued by the Claimant dated 30.3.3016, the dispute was described as this: i.

The Claimant refers to their Payment Claim with ref. no ZB/CMD/ PC/MARCH/2016 dated 9.3.2016 arising from the Project.

Pursuant to the Payment Claim, a dispute has arisen between the Claimant and the Respondent under the contract for the appointment of the Claimant by the Respondent as the contractor for the Balance Remaining Works for Main Building Works, Infrastructure Works and Mechanical and Electrical Works and Associated Works.

The Payment Claim dated 9.3.2016 was served on the Respondent by hand on 14.3.2016. No Payment Response was received from the Respondent and hence, the Respondent is deemed to have disputed the entire Payment Claim.

The disputes include the following: i. Non-payment of RM1,792,253.11 of works done for the Valuation for Interim Certificate No 1 dated 5.11.2015; ii. Non-payment of RM419,316.75 of works done for Valuation for Interim Certificate No 2 dated 28.12.2015. 7 [7] The Claimant proceeded to serve its Adjudication Claim, setting out the basis of its contractual claims and the reliefs claimed as well as attaching the relevant documents in support of its claim. Problem [8] The Respondent duly served its Adjudication Response raising jurisdictional challenge as well as substantive issues. The jurisdictional challenge is that the LoA dated 15.5.2015 is not a valid and binding contract, without any express terms for the Claimant to claim the work done. The Claimant's entitlement is in quantum meruit which is not a subject matter for Adjudication. The Respondent further contended that the LoA is not a valid and enforceable contract as it does not have a Bill of Quantities ("BQ"), preliminaries, preambles, contract drawings, specification, schedule of works, schedule of rate, etc. [9] Under substantive issues, the Respondent contended that there was no valid cause of action on the Payment Claim under Clause 30 of PAM Conditions and section 5 or section 36 CIPAA. The Respondent also argued that the Valuation for Interim Certificate No. 1 is not a valid Payment Certificate due to the collusion between the Claimant and the Architect in that the Certificate was issued after the termination of the Architect's services and that both Certificates are invalid and without contractual foundation. 8 [10] In the Adjudication Reply served by the Claimant on 27.6.2016, the Adjudicator was urged to ignore the Adjudication Response; the Claimant’s contention being that the scope of his inquiry under the provision of section 27 (1) did not extend to points raised in the Adjudication Response in the absence of any Payment Response. The Adjudicator’s jurisdiction is limited to the dispute raised in the Payment Claim only; there being no Payment Response served. [11] The Adjudicator conducted a site inspection in the exercise of his powers under section 25 (h) CIPAA and directed parties to attend on 16.7.2016. The Claimant did not attend the site inspection but the Respondent did. The Adjudicator stated in paragraph 11.3 of his Decision that he had "interrogated the Respondent to explain the scope of works and the works that were done by the Claimant. The site inspection started from 10am and finished at 3pm. [12] The Adjudicator delivered his Adjudication Decision on 12.8.2016. He decided in favour of the Claimant for both claims under the two Interim Certificates amounting to RM2,211,569.86. The payment due date was stated as within 10 days from the date of the decision i.e. on or before 22.8.2016. Interest at the rate of 5% per annum was also awarded on the amount due from the date of due payment 22.8.2016 to 9 date of full payment. He also awarded the costs of Adjudication to the Claimant. Prayers [13] By Originating Summons No.: WA-24C-103-09/2016 the Respondent in the Adjudication is the Plaintiff and the Claimant the Defendant. The Respondent sought to set aside the Adjudication Decision on ground of excess of jurisdiction by the Adjudicator and also on ground of breach of natural justice under section 15 CIPAA. [14] In Originating Summons No.: WA-24C-94-09/2016 the Claimant as Plaintiff is applying to enforce the Adjudication Decision as if it is a judgment of the Court pursuant to section 28 CIPAA against the Respondent as Defendant. [15] Both Originating Summonses were by consent of the parties, heard together as one is the flip side of the other. Parties agreed that if the Adjudication Decision is not set aside, then the Adjudication Decision will correspondingly be enforced by this Court. [16] For the avoidance of confusion, the parties shall be referred to as they appeared in the Adjudication as Claimant and Respondent and by their names i.e. Zana Bina and Cosmic Master respectively. 10 Principles Whether the Respondent, having been deemed to have disputed the Claimant's Payment Claim, is entitled to raise new defences in its Adjudication Response filed [17] As the Respondent did not file a Payment Response, it is deemed to have disputed the whole of the Claimant's Payment Claim as provided for under section 6 (4) CIPAA. By disputing the Payment Claim, the Claimant is then put to proof on the balance of probabilities its Payment Claim. It is a position that the non-paying party Cosmic Master had taken. The non-paying party has not given any reason for refusing to pay. [18] If the Respondent has a specific matter to raise by way of a defence to the Payment Claim in giving reasons for not paying the amount claimed or any part thereof in the Payment Claim, the Respondent as the non-paying party must raise it in its Payment Response that is to be filed. Section 6 (3) CIPAA provides 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) 11 [19] However the Respondent had raised for the first time in its Adjudication Response the invalidity of the Interim Certificate of Payment of the Architect. Section 27 (1) CIPAA is clear in that the Adjudicator's jurisdiction in relation to any dispute is limited to the matter referred to him for Adjudication under section 5 and 6 CIPAA. It reads as follows: "27. Jurisdiction of Adjudicator 1) Subject to subsection (2), the adjudicator’s jurisdiction in relation to any dispute is limited to the matter referred to adjudication by the parties pursuant to sections 5 and 6." [20] I would refer to this as "contingent jurisdiction" in that for an Adjudicator to have jurisdiction, parties must fulfill the contingent condition of having referred to the matter in the Payment Claim under section 5 and the Payment Response under section 6 CIPAA. Be that as it may, parties may extend the jurisdiction of the Adjudicator by agreement in writing even though the matter had not been referred to in the Payment Claim and the Payment Response as provided for under section 27 (2) which reads: "2) The parties to adjudication may at any time by agreement in writing extend the jurisdiction of the adjudicator to decide on any 12 other matter not referred to the adjudicator pursuant to sections 5 and 6." [21] Thus In Bina Puri Construction Sdn. Bhd. v Hing Nyit Enterprise Sdn. Bhd [2015] 8 CLJ 728, Bina Puri did not file a Payment Response but went on to raise cross claims in the Adjudication Response. These cross claims amounting to RM13,544,690.45 were those of the subjects of a set off and counterclaim it filed in a High Court civil action running side by side with the adjudication proceedings. It was held that the Adjudicator was correct when he ruled that the cross claims (i.e. the subjects of the set off and counterclaim) were outside the remit of his jurisdiction because a Payment Response (into which these cross claims could have been incorporated) was not served in the adjudication. The High Court in Bina Puri (supra) observed as follows: “[12] the Adjudicator does not possess inherent jurisdiction, his jurisdiction is limited to the dispute raised under sections 5 and 6 i.e. the Payment Claim and the Payment Response. [13] ...The limits of jurisdiction of the adjudicator are a matter governed by law, i.e. Section 27(2) of CIPAA." (emphasis added) [22] Likewise in View Esteem Sdn. Bhd. v Bina Puri Holdings Sdn. Bhd. [2015] MLJU 695, View Esteem (the non-paying party) filed a 13 Payment Response but went out of bound when it asserted a counterclaim or set-off against the Payment Claim in order to recoup advance payment and loss and expense and other damages it alleged suffered due to breaches of contract on the part of the unpaid party. It was held that the Adjudicator was correct when he ruled that the cross claims (by way of set off and/or counterclaim) that the non-paying party raised for the first time in the Adjudication Response were outside the dispute referred to him because the Payment Response that the non-paying party served did not make reference to any of these cross claims. [23] Her Ladyship Mary Lim J (now JCA) explained as follows in View Esteem (supra): "[66] ...It may be said that by virtue of subsection 27 (1), the Payment Claim and the Payment Response is to adjudication what pleadings are to civil litigation. Parties are bound by their pleadings under the rules of procedure in civil litigation; in adjudication, those “pleadings” are to be found in the Payment Claim and the Payment Response; and not in the Adjudication Claim, Adjudication Response or the Adjudication Reply. [67] The failure to file a Payment Response will only afford the non-responding party some “security” or comfort of not having had 14 a “default judgment” of sorts entered against them because subsection 6 (4) deems the Payment Claim to be disputed. [68] For the unpaid party, the absence of a Payment Response means that the unpaid party as a claimant in the adjudication proceedings will only be required to prove the matters raised in the payment claim without having to meet any onus of proof which may, in a defended payment disputed through the Payment Response, shift back to the unpaid party or claimant.” (emphasis added) [24] Further in WRP Asia Pacific Sdn Bhd v NS Bluescope Lysaght Malaysia Sdn Bhd [2015] 1 LNS 1236, it was reiterated as follows: “[27] Subsection 27 (1) restricts the jurisdiction of the Adjudicator to the matters found in sections 5 and 6. In short, the Adjudicator takes jurisdiction from the payment claim and the payment response; not from the adjudication claim. This is materially significant and important as this brings to bear the whole scheme of CIPAA 2012." (emphasis added) [25] This is to be differentiated from core jurisdiction of the Adjudicator in that if CIPAA does not confer jurisdiction on the Adjudicator, then he does not have jurisdiction. Section 2 CIPAA provides that: 15 "This Act shall apply to every construction contract made in writing relating to construction work carried out wholly or partly within the territory of Malaysia including a construction contract entered into by the Government.” [26] A "construction contract” means a construction work contract or construction consultancy contract as defined in section 2 CIPAA. [27] For instance if CIPAA does not apply to shipping or mining contract as generally these are not construction contracts within the meaning of "construction work" as defined in section 2, then the Adjudicator does not have jurisdiction to begin with. [28] A jurisdictional challenge may be raised at any time and when raised the Adjudicator may proceed and complete the adjudication proceedings, and the same issue may be raised in a setting aside application by an aggrieved party under section 15 CIPAA under the ground of "excess of jurisdiction" or in opposing an enforcement application under section 28 CIPAA. [29] This is expressly allowed for under section 27 (3) CIPAA which reads: "Notwithstanding a jurisdictional challenge, the adjudicator may in his discretion proceed and complete the adjudication 16 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) [30] Thus as the scheme of statutory Adjudication applies only to construction contract in made in writing, the fact that it is raised for the first time in the Respondent's Adjudication Response that there is no construction contract, much less in writing, cannot be disregarded by the Adjudicator. The learned Adjudicator may proceed with the Adjudication proceedings and deliver his decision and the issue of lack of jurisdiction may be taken up during the setting aside stage or the enforcement stage. [31] Learned counsel for the Respondent, Cosmic Master, argued that nowhere in CIPAA does it say that the Adjudication Response or any issue raised therein shall be disregarded if a non-paying party did not file a Payment Response. While that may be so for a core jurisdiction challenge, it does not apply to matters of contingent jurisdiction which is not raised in the Payment Response as section 27 (1) CIPAA clearly provides for the Adjudicator’s jurisdiction in relation to any dispute to be limited to the matter referred to Adjudication by the parties pursuant to sections 5 and 6. [32] Thus in having been deemed to have disputed the Claimant's Payment Claim, the Respondent in the Adjudication is in effect telling the 17 Claimant to prove its Payment Claim without giving its reasons for disputing the Claimant's Payment Claim. [33] If the Claimant is disputing the correctness of the sum claimed and the veracity of it as well as the validity of the Interim Certificates of the Claimant in that it was procured through collusion or that it was not in compliance with the contract in that no Architect's Instruction had been issued for the work done as required under the PAM Contract, then it should expressly say so in its Payment Response. It would be too late in the day to raise it in the Adjudication Response. The Adjudicator was right in dismissing the above reasons given as defences for the first time in the Adjudication Response under section 27 (1) CIPAA as his jurisdiction in confined to the matters raised in and defined by the Payment Claim and Payment Response (not served). There is thus no breach of natural justice on the part of the Adjudicator in not considering these defences not raised because no Payment Response was filed pursuant to section 6 (2) CIPAA. [34] The Adjudicator had summarized the issues for his determination as follows in paragraph 14 of the Adjudication Decision as follows: “14.1 Whether the Claimant is entitled to claim the sum of amount RM1,792,253.11 claimed under the Valuation For Interim Certificate No. 1 dated 5.11.2015 and if not, what is the reasonable amount? 18

14.2 Whether the Claimant is entitled to claim the sum of amount RM419,316.75 claimed under the Valuation For Interim Certificate No. 2 dated 28.12.2015, and if not, what is the reasonable amount? [35] It cannot be that a more prudent non-paying party who has taken the trouble to give reasons for disputing or refuting the Payment Claim is confined to those issues with respect to the jurisdiction of the Adjudicator to decide and that a non-paying party who by indolence or ignorance did not serve a Payment Response is at liberty and indeed having the license to canvass all possible reasons for disputing the Payment Claim in the Adjudication Response to be served after receipt of the Adjudication Claim. [36] The learned Adjudicator therefore was right in holding as follows at paragraph 13.2 and 13.3 of his Decision: "13.2 The collusion/falsity of architect payment certificate dated 5.11.2015 and the issue of the works done are without the requisite (sic) prior to AI for the provisional sums of type contract shall also be dismissed due to sub-section 27 (1) CIPAA.

13.3 The Claimant's Adjudication Reply which mentioned the Adjudicator's jurisdiction is limited to disputes raised in the Payment Claim is accepted." 19 [37] However, with respect to issue of core jurisdiction, as in here the issue of whether there was a construction contract made in writing, I would say it is not too late to raise it for the first time in the Adjudication Response or at any time during the Adjudication proceedings and even at the stage of setting aside under section 15 CIPAA or in opposing an enforcement of the Adjudication Decision under section 28 CIPAA. [38] By the same token, the Respondent is entitled to raise in its Adjudication Response, filed in answer to the Adjudication Claim, that it is objecting on ground that the Payment Claim is not a valid Payment Claim for non-compliance with CIPAA, whether as a pure question of law or a mixed question of law and fact. Whether there was a construction contract made in writing upon which a dispute has arisen which is referable to Adjudication under CIPAA [39] The Adjudicator had found as a matter of fact that the LoA dated 15.5.2015 is a construction contract made in writing. It was duly signed by the Managing Director of Cosmic Master and acknowledged acceptance by the Claimant, Zana Bina wherein it declared that it agreed and accepted all the terms and conditions set out in the LoA. The LoA and the supporting documents were marked as Exhibit P-2 in Enclosure 3 of the setting aside application. 20 [40] Granted there were further documents as "Contract Documents" to be signed by the parties but these were nothing than incorporating all the agreed terms of the Tender referred to in Clause 1) of the LoA. It was to be signed within thirty (30) calendar days from the site possession date. [41] Site possession under Clause 3)(a) was on 1.6.2015. The contract duration for the Works under Clause 3)(b) shall be Six and a half (6 1/2) months commencing from the Site Possession Date. The Date of Completion of the Works was on 15.12.2015. The Contract Sum for the Works under Clause 3)(c) is RM16,146,000.00 and shall be on a Provisional Sum - Cost Plus (with Quantity) basis. [42] What is pertinent is that it is expressly provided for in Clause 2) of the LoA that: "Pending the execution of the Contract Documents, the terms and conditions contained in this LOA and Appendix A (Summary of Contract Sum), Appendix B (PAM Form of Contract) and C (Formula of Recoupment of Advance Payment) herein attached shall collectively form a legal and binding contract between you and CMDSB." (emphasis added) 21 [43] The LoA was expressly stated in the caption to be for “the balance remaining works for Main Building Works, Infrastructure Works, M&E Works and Associated Works in Taman Seri Molek Perdana." [44] In Appendix A of the Summary of Contract Sum is stated the breakdown of the Provisional Sums for the various items of Works. In the Interim Progress Claim No. 1 submitted by the Claimant to the Respondent dated 30.10.2015, the Architect and the QS have no difficulty certifying the amount and value of Works done for each of the items. [45] For Interim Progress Claim No. 2 submitted by the Claimant to the Respondent dated 12.12.2015, the QS had no problem certifying the valuation of Works done. [46] Learned counsel for the Respondent submitted that the LoA was only an anticipated contract on PAM 2006 terms which did not materialize and to that extent void due to want of definition of the works in a Bill of Quantities, an essential document and without which BQ the mechanism of the LoA did not and could not operate as intended, and that therefore the Works as claimed were works under an anticipated contract as opposed to under the express terms of a concluded contract. 22 [47] Learned counsel for the Respondent cited the following cases in support of the above proposition: Q2 Engineering Sdn. Bhd. v PJI-LFGC (Vietnam) Ltd & Ors [2013] 8 MLJ 157, from para. [56] - [72] Delmere Holdings Pty Ltd v Green [2015] WASC 148, from para. 37-44, 96, 102, 114-135 Syarikat Binaan Utara Jaya v Koperasi Serbaguna Sungai Glugor Bhd [2009] 1 CLJ 786 [48] Learned counsel for the Respondent further submitted that the object and purpose of the transaction was to enter into a BQ Contract on PAM 2006 terms for an exhaustive definition of the ‘balance remaining works’ to which all the provisional sums relate, all on a cost-plus basis. [49] On the meaning of ‘provisional sum’, learned counsel for the Respondent referred to the opening statement of Lord Justice May in Midland Expressway Ltd v Carillion Construction Ltd and others [2006] EWCA Civ 936 (pp. 88-96) as follows: “The term “provisional sum” is generally well understood in the construction industry. It is used in pricing construction contracts to refer either to work which is truly provisional, in the sense that it may or may not be carried out at all, or to work whose content 23 is undefined, so that the parties decide not to try to price it accurately when they enter into their contract. A provisional sum is usually included as a round figure guess. It is included mathematically in the original contract price but the parties do not expect the initial round figure to be paid without adjustment. The contract usually provides expressly how it is to be dealt with. A common clause in substance provides for the provisional sum to be omitted and an appropriate valuation of the work actually carried out to be substituted for it. In this general sense, the term “provisional sum” is close to a term of art but its precise meaning and effect depends on the terms of the individual contract." (emphasis added) [50] It was also submitted that there is no basis for estoppel to operate here as there was simply no contract to begin with: Cobbe v Yeoman's Row Management Ltd [2008] UKHL 55. [51] The learned Adjudicator had considered the jurisdictional objection raised in that there was no construction contract made in writing. In paragraph 13.1 of his Decision, the learned Adjudicator found as follows: "13.1 ...I found that it is a valid and enforceable construction contract in writing between the Claimant and the Respondent to which shown (sic) relationship of the parties as the 'Contractor' vs 24 'Employer'. Therefore, according to section 2 of CIPAA, the Claimant is entitled to refer the payment disputes and claims of the unpaid work done under the CIPAA. The Respondent's jurisdiction (sic) challenge to dispute the validity of LoA shall be dismissed." [52] Admittedly, the reason given is brief but brevity is not a ground for setting aside a finding of jurisdiction. I agree that if the learned Adjudicator had arrived on a wrong conclusion of jurisdiction, this Court in deciding the matter unfettered by any finding of fact of the learned Adjudicator, is at liberty to arrive at its own finding on jurisdiction. [53] I see no good reason to disagree with the learned Adjudicator. The fact that there is a construction contract between the Claimant and the Respondent as borne out by Clause 2) of the LoA is self-evident. It was on the strength of this LoA together with the supporting documents that the Claimant was allowed possession of site and to commence the balance Works. [54] Parties apparently know what are the remaining balance Works to be done and if indeed the Claimant had begun work without the approval of the Architect appointed by the Respondent, surely the Architect or the Respondent would have stopped the Claimant. As Clause 1) of the LoA provides that the execution of the Contract Documents must take place within thirty (30) calendar days from the site possession date, one would 25 have expected this requirement to have been waived if by that time there was no further Contract Documents executed. The Respondent did not terminate the LoA nor did it stop the Claimant from commencing or continuing with the Works. Finally when termination of the Claimant's employment came after some 6 months of attending to the balance Works, it was on ground of delay in the completion of the Works! [55] This Court finds the following Guideline issued by KLRCA helpful with respect to whether there is a construction contract made in writing: “Circular CIPAA 03 KLRCA’s Guideline on the meaning of “Construction Contract Made In Writing”’’ 28 Apr 2014 The Construction Industry Payment and Adjudication Act 2012 (“CIPAA”) came into operation on 15 April 2014. Section 2 of the Act provides that statutory adjudication regime shall apply to construction contracts made in writing. However, no definition or further elaboration is provided in the Act as to what ‘construction contract made in writing’ means. Given the fact that there are various means by which a construction contract may be made, a clear guideline on the meaning of a ‘construction contract made in writing’ will ensure 26 that parties to a construction contract are guided as to whether or not payment disputes arising under their contract can be referred to adjudication under the Act. Further, it will eliminate the need for the adjudicator who may not be legally trained to grapple with the complexity of the issue of whether a construction contract is in writing. As such the KLRCA is of the view that it would be expedient and/or necessary to provide clear guidance and definition as to what the phrase ‘construction contract made in writing’ mean, for giving full effect and the better carrying out of the provisions of the Act. The KLRCA adopts the following definition of a ‘construction contract in writing’: ‘Construction Contract In Writing’

There is a contract in writing:-

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

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

if the contract is evidenced in writing. 27

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

A contract is evidenced in writing if a contract made otherwise than in writing is recorded by one of the parties, or by a third party, with the authority of the parties to the contract. The KLRCA Guideline on Construction Contract in Writing shall apply to all adjudication cases commenced under CIPAA. A copy of the KLRCA Guideline can be found at: www.klrca.org.my Dated 28th day of April, 2014. director-signature Professor Datuk Sundra Rajoo Director of KLRCA [56] Clearly an expansive and generous interpretation is to be given to the meaning of a "contract made in writing" in line with the purpose of CIPAA which is captured to some extent by its long title that reads: "An Act to facilitate regular and timely payment, to provide a mechanism for speedy dispute resolution through adjudication, to provide remedies for the recovery of payment in the construction industry and to provide for connected and incidental matters." 28 [57] It must be borne in mind that generally it is the Employer that would rely on the fact that there is no construction contract in writing to defeat or delay a Payment Claim for work done. The Claimant/Contractor on the other hand has a limited time frame to complete the works and it cannot be that if he does the work, he is damned if there is no concluded contract in that further documents are to be signed! Conversely, if he does not commence work, as in this case when completion date is from the date of site possession which had already been given, he runs the risk of late completion and be damned with LAD claims! [58] When the Respondent here had every opportunity to stop the Claimant from starting the balance Works until those further Contract Documents are signed, it must mean that the Respondent had waived that requirement or is otherwise estopped from contending otherwise by their very conduct. [59] The justification for that becomes more understandable when, as here, it is the Architect and QS appointed by the Respondent that had certified the Interim Progress Claims. [60] I would therefore hold that there is a construction contract in writing from which a dispute has arisen and that the Adjudicator has jurisdiction to hear the dispute and decide accordingly. 29 Whether there was a valid Payment Claim in compliance with CIPAA before the Adjudicator [61] Learned counsel for the Respondent submitted that the Payment Claim of the Claimant was not a valid Payment Claim as it was not in reference to "Payment" which under section 2 CIPAA "means a payment for work done or services rendered under the express terms of a construction contract." (emphasis added) [62] He contended that the works or claims items to which the Payment Claim relates were dehors or not under the express terms of the LoA at the very least. Consequently, the decision of the learned Adjudicator is a nullity in that it was made in excess of jurisdiction. [63] The payment claim that an unpaid party serve must meet the requirements of s 5 (1) and s 5 (2) for it to qualify as a valid payment claim under the Act; ss 5 (1) and 5 (2) read as follows: "5. Payment Claim

An unpaid party may serve a payment claim on a non-paying party for payment pursuant to a construction contract.

The payment claim shall be in writing and shall include—

the amount claimed and due date for payment of the amount claimed; 30

details to identify the cause of action including the provision in the construction contract to which the payment relates;

description of the work or services to which the payment relates; and

a statement that it is made under this Act." (emphasis added) [64] Learned counsel for the Respondent sought to persuade this Court that this non-compliance with the requirements of CIPAA in section 5 (2) goes towards jurisdiction and as such, the learned Adjudicator has no right to get it wrong! In other words, if the learned Adjudicator held that it is a valid Payment Claim when it is not as it is not a claim under the provisions of the construction contract, then this Court must set aside the entire Adjudication Decision as no valid appointment of an Adjudicator can proceed from an invalid Payment Claim served. [65] I appreciate that this question of when a seeming non-compliance with the requirement of a Payment Claim under an Act is a jurisdictional issue has vexed the Courts in many jurisdictions. [66] In Nepean Engineer Pty Ltd v Total Process Services Pty Ltd (In Liquidation) [2005] 64 NSWCA 409, with reference to a payment 31 claim under section 13 (2) of the (NSW) Building And Construction Industry Security Of Payment Act 1999, which provision is almost similar to that of our section 5 (2) CIPAA, Hodgson JA said at page 457 para [36] of the judgment as follows: “That is, I do not think a payment claim can be treated as a nullity for failure to comply with s. 13 (2)(a) of the Act, unless the failure is patent on its face.” [67] In Pacific GNRL Securities v Soliman and Sons [2006] NSWSC 13, the New South Wales Supreme Court had to decide on whether non-compliance with some provisions of their Act with respect to the Payment Claim makes the Adjudication Determination void. Brereton J argued as follows in his judgment: "Is the determination void for service out of time of the payment claim? 30 The Owners submit that there was a non-compliance with a basic and essential requirement prescribed in the Act for there to be a valid determination, in that the payment claim was not made within 12 months of performance of the latest of the construction work to which it relates. 31 Section 13 of the Act relevantly provides as follows: 32 13 Payment claims

A person referred to in section 8 (1) who is or who claims to be entitled to a progress payment (the claimant) may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make the payment.

A payment claim:

must identify the construction work (or related goods and services) to which the progress payment relates, and

must indicate the amount of the progress payment that the claimant claims to be due (the claimed amount), and

must state that it is made under this Act.

The claimed amount may include any amount:

that the respondent is liable to pay the claimant under section 27 (2A), or 33

that is held under the construction contract by the respondent and that the claimant claims is due for release.

A payment claim may be served only within:

the period determined by or in accordance with the terms of the construction contract, or

the period of 12 months after the construction work to which the claim relates was last carried out (or the related goods and services to which the claim relates were last supplied), whichever is the later.

A claimant cannot serve more than one payment claim in respect of each reference date under the construction contract.

However, subsection (5) does not prevent the claimant from including in a payment claim an amount that has been the subject of a previous claim. 32 Amongst the basic and essential requirements which are preconditions to a valid adjudicator’s determination is “service by the claimant on the respondent of a payment claim (s 13)” [Brodyn, [53]. Were the matter unaffected by authority, Mr Parker’s 34 argument - that that requirement was not satisfied, in the light of s 13 (4), by purported service of a claim more than 12 months after the construction work was last carried out – might have warranted closer consideration, but decisions of Campbell J and McDougall J, which I am far from prepared to say are plainly wrong, are to the contrary. 33 In Lifestyle Retirement Projects No.2 Pty Ltd v Parisi Homes Pty Ltd [2005] NSWSC 705, Campbell J (at [19]) held that precise compliance with s 13 (4) was not a basic requirement essential to validity of a determination. His Honour said: 18 It must immediately be noted that the language of section 13 (2) is in one sense mandatory, in stating what a payment claim “must” do. By different verbiage, section 13 (4) is likewise, in that same sense, mandatory by saying that the payment claim “may be served only within” a particular period of time. 19 In my view, consistently with Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 390-391, the question of what was intended to be essential for compliance with the basic requirements of a determination is not decided solely by these textual matters. 35 The fact that the language of section 13 (4) is in one sense mandatory shows that it sets out a “requirement”, but not that it is a basic and essential requirement. Rather, the question of what is essential needs to be decided, bearing in mind the object and purpose of the legislation. It is concerned with providing a quick and relatively easy way in which an obligation to make a payment on account of what ultimately might be found to be due can be established. Viewed in that light, I do not find that precise compliance with section 13 (4) is a basic requirement which is essential to a purported determination actually being a determination under the Act. Rather, section 13 (4) is one of the “more detailed requirements”, which Hodgson JA held exist in the Act. When there has been a document which purports to be a Payment Claim served, the fact (if it were a fact) that the construction work to which the claim relates was last carried out more than 12 months before the payment claim was served does not mean that the “basic and essential requirement” of “service ... of a payment claim (s 13)” has not been complied with. And even if it turned out that the adjudicator was mistaken in deciding that section 13 (4) had been complied with, that would not mean that his 36 determination was void, when he has addressed in a bona fide way the question of whether section 13 (4) has been complied with. 34 And in Energetech Australia Pty Ltd v Sides Engineering Pty Ltd [2005] NSWSC 801, McDougall J (at [25]) concluded that compliance with s 13 (4) was not “basic and essential” in the relevant sense. His Honour explained why: 25 Secondly, I think (and this may be no more than a variant or consequence of the first reason) the requirement of s 13 (4) is not "basic and essential" within the meaning of that phrase as it was explained by Hodgson JA in Brodyn. It may be readily understood (if I may say so with respect) why the matters identified by his Honour in that paragraph have the "basic and essential" quality to which he refers. As to the first, the terms of the Act are not engaged if there is no construction contract. Equally, in terms of the second, third and fourth alternatives, there is no valid adjudication unless they are engaged. Finally, in the case of the fifth requirement, it is simply a reflection of the statutory duty cast upon the adjudicator. 37 26 Those matters do not by and large require the investigation and resolution of difficult questions of fact or law. Usually, it will be clear whether or not there is a construction contract (particularly having regard to the wide definition of that expression in s 4 of the Act); and equally it will usually be clear whether (for example) a document of the kind described by s 13(1) has been served. 27 However, when one looks at the question of s 13 (4), a determination of the point raised by that question necessarily involves considerations of questions of fact, in the context of the relevant statutory provisions. The entitlement may well be conditional upon (in this case) service of a payment claim within the period determined or in accordance with the terms of the contract. That, however, I think, is a matter for the adjudicator to determine. If it is a matter for the adjudicator to determine, then, consistent with the approach indicated in Brodyn at 441 [54], it is a matter that, prima facie, does not fall within the "basic and essential requirement". [68] Therefore when a challenge is made which is said to go to the jurisdiction of the Adjudicator, the Adjudicator is still at liberty to decide on the exact nature of the non-compliance to see if it falls within the 38 "basic and essential requirement" of the Act or that it is a matter of construction with respect to whether there is a Payment Claim due under the construction contract as he understands it. The following analysis in Pacific GNRL Securities (supra) is helpful: "Is the determination void for insufficient specificity in the payment claim? 44 The Owners submit that there was non-compliance with a basic and essential requirement prescribed in the Act for there to be a valid determination, in that the payment claim did not sufficiently specify the construction work in respect of which it was made. 45 Although precision and particularity is required to a degree sufficient to apprise the parties of the real issues in dispute, regard may be had to the familiarity which the parties will have with construction industry practices and the formality and particularity of a pleading is not expected [Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140, [76]]. A payment claim is not a nullity for non-compliance with s 13(2)(a), at least unless the non-compliance is patent on the face of the claim [Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (in liq) [2005] NSWCA 409, 39 [34] – [39] (Hodgson JA), [46] – [48] (Santow JA)]. Moreover, compliance with s 13(2) is not a basic requirement fundamental to the validity of an adjudication, but one of the “more detailed requirements”, exact compliance with which is not essential to a valid determination [Brodyn, [54] – [55]]. 46 In fact, it is plain that the “period” referred to in the payment claim is the period since the last progress claim (of June 2004), and the claim is apportioned across several heads showing the percentage complete under each. Mr Dixon conceded in cross-examination that he understood precisely what was being claimed. 47 It follows that the determination is not void for insufficient specificity in the payment claim, since it sufficiently specified the construction work in respect of which it was made, and even if it did not, the sufficiency of a payment claim is not a basic and essential requirement non-compliance with which results in invalidity, but a matter within the jurisdiction of the adjudicator to determine, rightly or wrongly." (emphasis added) [69] Whilst in New South Wales' Act, the setting aside of an Adjudication Determination is by way of judicial review, the observations on jurisdiction can be analogously applied in our context when a 40 jurisdictional point is raised in a setting aside as in the Adjudicator had acted in excess of jurisdiction. In Brodyn Pty Ltd t/as Time Cost and Quality v Davenport & Anor [2004] NSWCA 394, it was explained as follows: "51 I agree with McDougall J that the scheme of the Act appears strongly against the availability of judicial review on the basis of non-jurisdictional error of law. The Act discloses a legislative intention to give an entitlement to progress payments, and to provide a mechanism to ensure that disputes concerning the amount of such payments are resolved with the minimum of delay. The payments themselves are only payments on account of a liability that will be finally determined otherwise: ss 3 (4), 32. The procedure contemplates a minimum of opportunity for court involvement: ss 3 (3), 25 (4). The remedy provided by s 27 can only work if a claimant can be confident of the protection given by s 27 (3): if the claimant faced the prospect that an adjudicator's determination could be set aside on any ground involving doubtful questions of law, as well as of fact, the risks involved in acting under s 27 would be prohibitive, and s 27 could operate as a trap. 41 52 However, it is plain in my opinion that for a document purporting to an adjudicator's determination to have the strong legal effect provided by the Act, it must satisfy whatever are the conditions laid down by the Act as essential for there to be such a determination. If it does not, the purported determination will not in truth be an adjudicator's determination within the meaning of the Act: it will be void and not merely voidable. A court of competent jurisdiction could in those circumstances grant relief by way of declaration or injunction, without the need to quash the determination by means of an order the nature of certiorari. 53 What then are the conditions laid down for the existence of an adjudicator's determination? The basic and essential requirements appear to include the following:

The existence of a construction contract between the claimant and the respondent, to which the Act applies (ss 7 and 8).

The service by the claimant on the respondent of a payment claim (s 13).

The making of an adjudication application by the claimant to an authorised nominating authority (s 17). 42

The reference of the application to an eligible adjudicator, who accepts the application (ss 18 and 19).

The determination by the adjudicator of this application (ss 19

and 21 (5)), by determining the amount of the progress payment, the date on which it becomes or became due and the rate of interest payable (ss 22 (1)) and the issue of a determination in writing (ss 22 (3) (a)). 54 The relevant sections contain more detailed requirements: for example, s 13 (2) as to the content of payment claims; s 17 as to the time when an adjudication application can be made and as to its contents; s 21 as to the time when an adjudication application may be determined; and s 22 as to the matters to be considered by the adjudicator and the provision of reasons. A question arises whether any non-compliance with any of these requirements has the effect that a purported determination is void, that is, is not in truth an adjudicator's determination. That question has been approached in the first instance decision by asking whether an error by the adjudicator in determining whether any of these requirements is satisfied is a jurisdictional or non-jurisdictional error. I think that approach has tended to cast the net too widely; and I think it is preferable to ask whether a requirement being 43 considered was intended by the legislature to be an essential pre-condition for the existence of an adjudicator's determination." (emphasis added) [70] I am not unaware that the decision in Brodyn was rejected in Chase Oyster Bar v Hamo Industries [2010] NSWCA 190. There the NSW Court of Appeal held that in the light of the decision of the High Court of Australia in Kirk v Industrial Relations Commission of New South Wales [2010] HCA 1 (“Kirk”): "33 There is no single test or theory or logical process by which the distinction between jurisdictional and non-jurisdictional error can be determined …" [71] In Oyster Bar the NSW Court of Appeal was concerned with the service of a payment claim that did not comply with a mandatory requirement of the NSW Act as to the period within which it was required to be served, and the court held that as a consequence, the adjudicator’s award was also invalid. The court held that the adjudicator who decided that the payment claim was served within the mandatory prescribed period made an error of fact (which the court characterised as a “jurisdictional error”), and that certiorari was available to quash or set aside the adjudicator’s determination. The court rejected the decision in Brodyn that the court should be restricted to reviewing whether the 44 basic requirements (essential conditions) set out at [53] of Brodyn had been complied with. Spigelman CJ referred (at [37]-[38]) to the traditional distinction between mandatory and directory conditions, which had been replaced in Australia by the current test of whether “it is the purpose of the legislation that an act done in breach of a provision should be invalid", following the test laid down by the High Court Australia in Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28. The legislative purpose can be discerned from the language of the provision itself and of the associated provisions. [72] The Singapore Court of Appeal wrestled with this nebulous question of jurisdiction in the context of their Act on statutory adjudication. In Lee Wee Lick Terence (alias Li Weili Terence) v Chua Say Eng (formerly trading as Weng Fatt Construction Engineering) and another appeal [2012] SGCA 63; [2013] 1 SLR 401 the Court of Appeal had to reconcile the seemingly conflicting approaches to the issue of jurisdiction in adjudication under their Act. The first approach was developed in the cases of Chip Hup Hup Kee Construction Pte Ltd v Ssangyong Engineering & Construction Co Ltd [2010] 1 SLR 658, SEF Construction Pte Ltd v Skoy Connected Pte Ltd [2010] 1 SLR 733 and AM Associates (Singapore) Pte Ltd v Laguna National 45 Golf and Country Club Ltd [2009] SGHC 260, all decided by Judith Prakash J. In Chip Hup Hup Kee, Prakash J held that the formal validity and service of a Payment Claim were not jurisdictional issues. In SEF Construction and AM Associates, Prakash J held that the court’s role extended only to reviewing a closed list of “basic requirements” for the validity of an adjudication determination (see SEF Construction at [45]; AM Associates at [19]). This is to be contrasted with the second approach, set out in the case of Sungdo Engineering & Construction

(S) Pte Ltd v Italcor Pte Ltd [2010] 3 SLR 459 by Lee Seiu Kin J. On Lee J’s reasoning, a court may review an Adjudicator’s Decision on whether a document properly constitutes a payment claim under the Act or whether a Payment Claim was proper. The Court of Appeal in Lee Wee Lick Terence (supra) reconciled it this way: "[30] ... If there is no payment claim or if a payment claim is not served on the respondent, then the power of the [authorised nominating body] to nominate an adjudicator would not have arisen, and an appointment made in such circumstances would not be valid. The power of nomination under s 14 (1) of the Act is predicated on the existence of a payment claim and the service thereof on the respondent. An acceptance of an invalid nomination would not clothe the acceptor with the office of adjudicator. It is in 46 this sense that an adjudicator appointed in such circumstances is said to have no jurisdiction in the matter because he has not been validly appointed under the Act. Any issue arising in relation to the validity of the appointment of the adjudicator is a jurisdictional issue which must be reviewable by the court. This was the kind of issue that Lee J was concerned with in Sungdo." [31] However, we do not think that this was the same kind of jurisdictional issue that Prakash J had in mind when she held in Chip Hup Hup Kee ([14] supra) that whether the payment claim was in proper order or not would not have an impact on the adjudicator’s jurisdiction, as she also held that the court’s power of review should be restricted to supervising the appointment of adjudicators, i.e., the validity or otherwise of an appointment was subject to review by the court. What she had in mind was the case of a payment claim that was intended as a payment claim but which did not comply with all the requirements of the Act: it would still be a payment claim, but the adjudicator could “throw [it] out” for non-compliance (see [20] above). The distinction between Lee J’s proposition in Sungdo and that of Prakash J in Chip Hup Hup Kee is that the former proposition was made in relation to a payment claim which was in form a payment claim but not 47 intended to be such, and therefore did not have the effect of a payment claim, and the latter proposition was made in relation to a payment claim which was in form a payment claim and was intended to be such, but which did not satisfy all the requirements of the Act. In the first situation, a payment claim has not come into operation as a payment claim. In the second situation, a payment claim operates as a payment claim but it is defective for non-compliance with the requirements of the Act. The first situation goes to the validity of the appointment of the adjudicator. The second situation goes to the validity of the adjudication determination." (emphasis added) [73] The Court of Appeal in that case gave the following advice with respect to the role of the Adjudicator and the Court when a so-called jurisdictional issue is raised with respect to a Payment Claim: "The role of the adjudicator [64] We are of the opinion that the only functions of an adjudicator are to: (a) decide whether the adjudication application in question is made in accordance with s 13 (3) (a), (b) and (c) of the Act (see s 16 (2) (a)); and (b) to determine the adjudication application (see s 17 (2)). If the adjudication application complies with s 13 (3) (a), (b) and (c), the adjudicator should proceed with 48 the adjudication. He is not competent to decide whether he was validly appointed to adjudicate the matter (see [36] above). Thus, in this case, the Adjudicator need not and should not have decided issues (a) to (d) (at [10] above). [65] If the respondent wishes to argue that the adjudicator was not validly appointed or that the adjudicator has not exercised his power to determine the adjudication application properly (for example, because the adjudicator has not complied with s 16 (3) the Act), such argument should be made to the court. The respondent may apply to court to set aside the adjudication determination on this basis. If the respondent’s objection is that there is no valid payment claim, this should be raised as soon as possible in the payment response so as not to delay the adjudication process. The role of the court in a setting-aside action [66] Turning now to the court’s role in a setting-aside action, we agree with the holding in SEF Construction ([14] supra) that the court should not review the merits of an adjudicator’s decision. The court does, however, have the power to decide whether the adjudicator was validly appointed. If there is no payment claim or service of a payment claim, the appointment of an adjudicator will 49 be invalid, and the resulting adjudication determination would be null and void. [67] Even if there is a payment claim and service of that payment claim, the court may still set aside the adjudication determination on the ground that the claimant, in the course of making an adjudication application, has not complied with one (or more) of the provisions under the Act which is so important that it is the legislative purpose that an act done in breach of the provision should be invalid, whether it is labelled as an essential condition or a mandatory condition. A breach of such a provision would result in the adjudication determination being invalid." (emphasis added) [74] Learned counsel for the Respondent argued that the BQ and Architect Instruction are the sine quo non of the purported contract and the necessary foundation of the existence of a cause of action for both the Claims in the document (i.e. the purported Payment Claim) the Claimant served under s 5 (1). According to him, the express provision on all these requirements are on the face of the supporting material (i.e. the LoA) of the purported Payment Claim. He concluded that the purported Payment Claim is not a valid payment claim under section 5

due to a manifest failure contrary to the requirement of section 5 (2) 50

of identification of the cause of action in that the document did not assert as a fact nor did the supporting materials show the existence of any BQ or Architect’s Instruction for the works or costs underlying the claims. (para 26/30 Supporting Affidavit) [75] Again here I have no good reason to disagree with the learned Adjudicator. The learned Adjudicator has succinctly set out his reasoning as follows: "15.3 a) In the LoA's mode of Payment clearly stated that 'the Interim Payment Certificate shall be issued by the Architect.' and refers to Clause 30.1 of PAM Contract 2006 (With Quantities) is (sic) stated clearly that the certificate of payment for the work done shall be certified and valuated (sic) by the Architect and QS and do not need the direction and approval of the Respondent. Therefore, the sum of amount claimed under the Valuation For Interim Certificate No.1 is valid." [76] The clause referred to above is Clause 3)(d) Mode of Payment where under ii) it is provided as follows: 51 "ii) Subsequent payment will be subject to the (sic) any amount due in Interim Payment Certificate issued by the Architect and availability of fund in the HDA Account." (emphasis added) [77] Clause 30.1 of the PAM Contract (With Quantities) which, though not executed, is still part of a construction contract made in writing as Clause 2) of the LoA expressly provides that Appendix B (PAM Form of Contract) attached to the LoA shall form a legal and binding contract between the parties. Clause 30.1 states 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 and Quantity Surveyor, to enable them to consider and ascertain the amount to be included in an Interim Certificate. Upon receipt of the Contractor's details and particulars, the Architect after having received the payment valuation from the Quantity Surveyor shall, within twenty one (21) Days from the date of receipt of the Contractor's application, issue an Interim Certificate to the Employer with a copy to the Contractor, and the Employer shall thereafter pay the amount certified to the Contractor within the Period of Honouring Certificates ..." 52 [78] However rudimentary may be the express terms of payment, clearly the Architect and QS must have been satisfied with the complete details and particulars before issuing the Interim Certificate No. 1. This is a finding of fact of the learned Adjudicator and this being not an appeal, this Court shall not review that finding based on sufficiency of evidence. Suffice to say here that it is a finding that the learned Adjudicator is entitled to come to based on the facts before him. [79] Likewise when it comes to Interim Certificate No. 2 the learned Adjudicator made the following finding: "15.6 a) Refer to Clause 30.1 of the PAM Contract 2006 also indicate clearly that the Certificate of Payment for work done shall be evaluated and recommended by the QS prior (to) certification of the Architect and do not need the direction and approval of the Respondent. Although the Valuation for Interim Certificate (was) yet to be certified by the Architect, but the Claimant (is) still entitled to claim the sum of amount under the Valuation for Interim Certificate No. 2 pursuant to section 36 of CIPAA. Therefore, the sum of amount claimed under the Valuation For Interim Certificate No. 2 is valid." 53 [80] Section 36 (3) and (4) CIPAA provides as follows with respect to "Default Provisions in the Absence of Terms of Payment": "3) The frequency of progress payment is: a) Monthly, for construction work and construction consultancy services; and b) Upon the delivery of supply, for the supply of construction materials, equipment or workers in connection with a construction contract. 4) The due date for payment under subsection (3) is thirty calendar days from the receipt of the invoice." (emphasis added) [81] Apparently the learned Adjudicator took the view that the failure of the Architect to certify the progress claim made is no bar to the Claimant/Contractor submitting their Payment Claim for Adjudication under the default provision for payment. As the services of the Architect had been terminated by then, the Claimant was entitled to fall back on section 36 (4) CIPAA and to treat payment as due 30 days after the submission of the Interim Certificate No. 2 dated 18.12.2015 duly evaluated and recommended by the QS and so the due date for payment was taken to be 27.1.2016. This Court finds nothing 54 objectionable with this approach, treating the Valuation for Interim Certificate No. 2 dated 12 December 2015 as an "invoice" within the meaning of section 36 (4) CIPAA. [82] Even if the learned Adjudicator did not answer correctly the question of law posed for him to answer, this does not merit this Court in a section 15 application to review his decision on merits and to reverse it unless it is a case of patent non-compliance affecting his core jurisdiction, which in this case, it is not. [83] Any further consideration as to what is the proper amount due under the Valuation Interim Certificate No.1 and 2 would involve descending into the merits of the Adjudicator's decision. [84] The learned Adjudicator did not accept unquestioningly the Claimant's Payment Claim under the 2 Valuation Interim Certificates. He exercised his powers under section 25 (h) CIPAA and directed both parties to attend a site inspection for the Project on 16.7.2016 during the time 10am until 3pm. The Claimant objected, saying no useful purpose could be achieved insisting that amounts ‘certified’ and would have to be allowed as such (Exhibit ‘P-16’). Access to site was granted on 16.7.2016, during which Sr. Lim Keng Heng the Q.S. of KH Alliance Sdn. Bhd. and Ir. Teo Yuan Hwa, the M&E Consulting Engineer of JP Ace 55 Sdn. Bhd., both being the experts of the Respondent, substantiated the basis of their respective findings/reports to Adjudicator. [85] The Adjudicator had given his reasons for rejecting the report of the Respondent's experts: "11.3. ...During the site inspection, I had interrogated the Respondent to explain the scope of works and the works were done by the Claimant. The site inspection started from 10am and finished at 3pm. ... 15 b) After site inspection with the Respondent for the project, I found that the Respondent’s third parties’ expertise valuation reports was not evaluated based on completed works done of the Claimant and has excluded the Claimant’s rectification/repairing works for the Project. Further to this, the calculation used in valuation was based on the quantities and rates which are proposed by the Respondent’s expertise (sic) and did not follow the terms and conditions of the contract. I hereby reject the valuation report." (emphasis added) [86] It might also be stated here that the Adjudicator also has under his armoury of powers the power under section 25 (i) to inquisitorially take 56 the initiative to ascertain the facts and the law required for the decision. Perhaps the use of the word "interrogated" is misplaced for that is used more for the police in interrogating a suspect in a crime; the Adjudicator probably meant he "inquisitorially took the initiative to inquire in depth into the veracity of the Payment Claims made" and the objections taken out by the Respondent with their alternative valuation of the works done." [87] It must also be noted that under section 25 (n) the Adjudicator has the power to decide or declare on any matter notwithstanding no certificate has been issued in respect of the matter. Even if it be a case where the Architect should not have issued the Valuation Interim Certificate No.1 and that the Valuation Interim Certificate No.2, not being issued by the Architect is not valid, the Adjudicator still could ascertain the value of work done through the site inspection and through the questions asked of the parties present. [88] There is no basis for alleging a breach of natural justice just because the Adjudicator had not disclosed his findings to the parties after the site inspection as these fall within the realm of finding of facts which this Court would be slow to interfere save for conduct so egregious that no reasonable fact finder would have come to the conclusion that had been arrived at unless there was a lack of 57 independence or impartiality on the part of the Adjudicator as a fact-finder. This is not the case here. [89] The Respondent had contended that their experts in their report had re-evaluated the Claimant's work done for the Project and recommended that the work done amounted to RM632,045.86. It would appear at the end of the day, the Respondent is not happy with the quantum that was adjudicated in favour of the Claimant. I am of course conscious of the fact that the Respondent is mounting this argument in the context that there was no construction contract to begin with and that what the Claimant may be entitled is a restitutionary quantum meruit claim which is not the subject matter of Adjudication under a Payment Claim as properly understood, citing as authority a recent decision of the Supreme Court of Western Australia in Delmere Holdings Pty Ltd v Green [2015] WASC 148. [90] The Respondent also expressed its consternation that in spite of the controversies highlighted in its Adjudication Response, the Adjudicator had opted for what is referred to generally as a document-only Adjudication without a full hearing as it were where witnesses are called and submissions and clarification thereafter before decision. I can do no better than to quote from Justice Mary Lim J (now JCA) in Ranhill 58 E & C Sdn Bhd v Tioxide (Malaysia) Sdn Bhd [2015] 1 LNS 1435 where her Ladyship observed astutely as follows: “[65] ...Subsection 21 (1) provides that the adjudicator is to conduct the adjudication in the manner as the adjudicator considers appropriate within the powers provided under section

The adjudicator is conferred discretion as to how the adjudication is to be conducted. To assist the adjudicator in carrying out that responsibility, the adjudicator is endowed with certain unusual and arguably extensive powers which does not often see spelt out in other legislations ... [66] Section 25 provides the adjudicator with a long list of powers, that is, the power to:

establish the procedures in conducting the adjudication proceedings including the submission of documents by the parties ... [67] In other words, it is for the adjudicator to deal with how the adjudication proceeding are to proceed. This could include the calling of meetings and whether there will be hearings including oral hearings where witnesses may or may not be called ...“ (emphasis added) 59 [91] It would appear that at the end of the day the Adjudicator had taken a plain and prosaic approach to ascertaining if there was a valid Payment Claim under CIPAA in that there was a claim for work done in this case that was traceable to a construction contract made in writing; having in mind the over-arching purpose of CIPAA which is to facilitate regular and timely payment and to provide remedies for the recovery of payment in the construction industry. [92] It is not for this Court under a section 15 CIPAA setting aside application to disturb or vary the finding of facts of the Adjudicator or to correct his so-called wrong interpretation of the provisions of the contract or of the law. This can be done in arbitration or litigation as the final decision there will supersede the Adjudication Decision here. The Adjudication Decision here has only the element of temporary finality; it is binding unless under section 13 (c) CIPAA the dispute is finally decided by arbitration or the court. [93] In reaching the decision that the Adjudicator did, I am not satisfied that he had exceeded his jurisdiction or that he failed to act independently or impartially or that there has been a breach of natural justice. 60 Whether there was a valid appointment of the Adjudicator under CIPAA [94] Learned counsel for the Respondent contended that the appointment of the Adjudicator was invalid because he failed to indicate an acceptance of appointment and to accept his appointment on intelligible terms within the ten (10) working days period as prescribed under section 23 (2) read together with section 24 CIPAA. [95] On 26.4.2016, the Adjudicator received the KLRCA notice of appointment under section 23 (1). The 10 working days he was required to indicate his acceptance of appointment along with the terms under section 23 (2) and section 24 expired on 11.5.2016. On 6.5.2016 and on 9.5.2016 he gave the Respondent and Claimant respectively a ‘Notice of Acceptance’ dated 5.5.2017, purportedly it was contended, to indicate his acceptance of appointment under section 23 (2) and under section 24 on terms that reads: “…as per the Terms and Conditions of the Appointment agreed by the parties, a copy of which is attached the KLRCA’s standard terms of appointment and fees as following for the services of an adjudicator in force as of the date of this letter." (emphasis added) 61 [96] It was submitted by learned counsel for the Respondent that the bold words which appear to make reference to two distinct sets of Terms and Conditions of the Appointment is unintelligible; the first being the Terms and Conditions of Appointment dated 27.4.2016 which he had extended to the Respondent that day, and the second one the so-called KLRCA standard terms of appointment was not shown. [97] It was further argued that the Respondent could not comprehend the terms and did not comply with his direction. Upon receiving advice, the Respondent vide solicitors’ letter dated 2.6.2016 to the Adjudicator, pointed out the confusion, by which time the 10 working days to 11.5.2016 under section 23 (2) had expired, and the Respondent sought for an extension of time to serve an Adjudication Response. The explanation was accepted and the notice of extension of time granted reads: “Pursuant to section 29 (p) …, I hereby direct the Respondent to serve a written adjudication response containing the nature and description of the dispute and the remedy sought together with any supporting documents on the Claimant …” [98] Adjudication Response dated 17.6.2016 was served on 17.6.2016 and copied to Adjudicator on or about 20.6.2016. 62 [99] The provisions of sections 21 to 24 are reproduced below:

Appointment of Adjudicator An adjudicator may be appointed in the following manner:

By agreement of the parties in dispute within ten working days from the service of the notice of adjudication by the claimant; or

By the Director of the KLRCA-

Upon the request of either party in dispute if there is no agreement of the parties under paragraph (a); or

(ii) Upon the request of the parties in dispute.

Appointment of Adjudicator by Parties

The claimant shall notify the adjudicator to be appointed under paragraph 21 (a) in writing and provide him with a copy of the notice of adjudication.

The adjudicator shall propose and negotiate his terms of appointment including fees chargeable with the parties and shall within ten working days from the date 63 he was notified of his appointment, indicate his acceptance and terms of his appointment.

If the adjudicator rejects his appointment or fails to indicate his acceptance of the appointment within the period specified in subsection (2), the parties may proceed to appoint another adjudicator in the manner provided under section 21.

Appointment of Adjudicator by Director of the KLRCA

The Director of the KLRCA shall appoint an adjudicator under paragraph 21 (b) within five working days upon receipt of a request and shall notify the parties and the adjudicator in writing.

The adjudicator shall propose and negotiate his terms of appointment including fees chargeable with the parties and shall within ten working days from the date he was notified of his appointment, indicate his acceptance and terms of his appointment.

If the adjudicator rejects his appointment or fails to indicate his acceptance of the appointment within the period specified in subsection (2)- 64

The parties may agree to appoint another adjudicator in the manner provided under paragraph 21 (a); or

The Director of the KLRCA may proceed to appoint another adjudicator in the manner provided under paragraph 21 (b).

Duties and Obligations of the Adjudicator The adjudicator shall at the time of the acceptance of appointment as an adjudicator make a declaration in writing that —

There is no conflict of interest in respect of his appointment;

He shall act independently, impartially and in a timely manner and avoid incurring unnecessary expense;

He shall comply with the principles of natural justice; and

There are no circumstances likely to give rise to justifiable doubts as to the adjudicator’s impartiality and independence. [100] The argument of learned counsel for the Respondent must be reproduced in full to appreciate its argument, if at all possible: "The words ‘acceptance and terms of his appointment’ and ‘acceptance of appointment’ in section 23 (2) and section 24 read 65 alongside each other and in the context of sections 23 (2), 23 (3) and 24 as a whole are not two separate subject matters. It is submitted that an acceptance of appointment takes meaning from its terms. In other words, we submit that if the terms have not been agreed upon there cannot be an indication of acceptance for the purpose of section 23 (2) much less an acceptance under section 24. Clearly, when Mr. Loo gave the purported indication of acceptance via the purported ‘Notice of Acceptance’ dated 5.5.2017 the terms were not then agreed and the indicated ‘terms’ to which his acceptance relates indecipherable. In the circumstances, Mr. Loo failed to indicate ‘his acceptance of appointment and terms of his appointment’ within the 10 working days as required under section 23 (2) and his purported ‘acceptance of appointment’ under section 24 is invalid due to want of certainty or agreement on the terms. Consequently, he was not competent to embark on any adjudication at all and his decision is null and void." [101] I agree with learned counsel for the Claimant that the Respondent ought to be estopped from raising this issue at this late juncture now. Such objection ought to have been taken by the Respondent in the Adjudication proceeding then and certainly not now. The issue cannot 66 now be a ground for setting aside the Adjudication Decision since it is no longer material and relevant. [102] First, the Respondent had written to the very Adjudicator for extension of time to file the Adjudication Response, whose appointment, it said was not agreed to because it could not decipher the Standard Terms and Conditions of KLRCA that was attached to the acceptance of the appointment. It must be stated here that the Adjudicator is not the one who has problem deciphering the Standard Terms and Conditions of KLRCA for the appointment of the Adjudicator. Rather it is the Respondent and so they are at liberty not to accept the said appointment because they are not agreeable to whatever they said are the undecipherable terms and conditions of appointment. [103] Section 19 (b) CIPAA provides that: "If the parties and the adjudicator fail to agree on the terms of appointment and the fees of the adjudicator, the KLRCA’s standard terms of appointment and fees for adjudicators shall apply." [104] Admittedly the KLRCA standard terms of appointment and fees are designed to save the time required under section 23 (2) CIPAA for the Adjudicator and the parties to negotiate to agreement within 10 days (of 67 the Adjudicator being notified of his appointment by KLRCA) the terms and conditions and the fees with respect to the appointment of the Adjudicator. [105] Rule 6 of the Construction Industry Payment & Adjudication Regulations 2014 reads: "KLRCA’s standard fees for services and expenses of adjudicator The KLRCA’s standard fees for the services and expenses of an adjudicator as specified in the Schedule shall apply if the parties in dispute and the adjudicator fail to agree on the terms of appointment and the fees of the adjudicator." [106] The Adjudicator had used the form provided for under Form 6 entitled "Notice of Acceptance of the Appointment to Act as Adjudicator" in the Schedule to the KLRCA Rules & Procedure. [107] Secondly, the Respondent had participated fully in the Adjudication proceedings without raising a whimper that there can be no valid appointment because they do not agree to the Standard Terms and Conditions of Appointment of Adjudicator. [108] One would have thought that if really that was bothering the Respondent, they could through their solicitors, write in for a clear copy or inquire from KLRCA. Their action and conduct belie their lack of 68 acceptance of the appointment of the said Adjudicator. It is as flimsy as it is frivolous an argument, to now say that the Adjudicator could not have accepted his appointment, on terms that the Respondent could not have known because the Terms and Conditions were indecipherable! Pronouncement [109] In the upshot, I had dismissed the Originating Summons for setting aside the Adjudication Decision with costs of RM5,000.00 to be paid by the Respondent, Cosmic Master to the Claimant, Zana Bina. Correspondingly I had allowed the Originating Summons for enforcement of the Adjudication a Decision with costs of RM3,000.00 to be paid by the Respondent to the Claimant. Dated: 27 January 2017. Y.A. LEE SWEE SENG Judge Construction Court High Court Kuala Lumpur 69 For the Plaintiff in OS: WA-24C-103-09/2016 : Goh Boon Yee and Chew Hao Nan For the Defendant in (Messrs B K Goh & Goh) OS: WA-24C-94-09/2016 For the Plaintiff in OS: WA-24C-94-09/2016 : Tan Chi Sian For the Defendant in (Messrs P Y Hoh & Tai) OS: WA-24C-103-09/2016 Date of Decision: 24 October 2016.