Anas Construction Sdn Bhd v Jkp Sdn Bhd (02(f)-4-01/2023(P))

Do the strict rules of pleadings, as applicable in civil claims before the Malaysian Courts, apply in adjudication proceedings under the Construction Industry Payment and Adjudication Act 2012?

Whether the dicta in View Esteem Sdn Bhd v Bina Puri Holdings Bhd [2018] 2 MLJ 22 prohibits an adjudicator from referring to a specific clause in a construction contract when allowing a claim, when the said clause was not specifically stated in the Payment Claim and Adjudication Claim by the claiming party?

In a CIPAA award, does the Adjudicator’s consideration of a specific clause in the construction contract, not specifically stated in the Payment Claim or Adjudication Claim, without inviting parties to further submit on the said clause, amount to a breach of natural justice or an act excess in jurisdiction, such that the said award ought to be set aside? [2] The appellant submits the answer to all three questions should be in the negative. I agree for the reasons that follow. Material facts [3] The appellant was the main contractor appointed by the respondent pursuant to a written construction contract dated 9 April 2015 [Construction Contract] using the PWD standard form of contract PWD Form 203A (Rev 1/2010) for the project known as “Cadangan Membina dan Menyiapkan Satu (1) Blok Pangsapuri 24 Tingkat Rumah Pangsa Kos Sederhana (382 units) di atas Tanah Tebusguna Kerajaan, Kampung Pisang Awak, Seksyen 4, Bandar Jelutong, Daerah Timur Laut, Pulau Pinang” with a completion date of 8 April 2017 but which was extended to 23 August 2019. [4] Disputes unfortunately arose between the parties leading the appellant to terminate the Construction Contract on 15 May 2017. The appellant submitted a total of 19 interim progress claims, some of which formed the subject of four other adjudication claims which are not in issue in these appeals. [5] On 9 June 2017, the appellant submitted its revised Final Claim together with supporting documents. The claim this time was for professional fees and charges amounting to RM855,074.21 incurred in relation to the preparation of a safety report, required following Architect’s Instruction No. 18. The Project Quantity Surveyor recommended a sum of RM795,013.78 to be paid to the appellant for such professional fees. The respondent did not pay. [6] And, so the appellant initiated statutory adjudication proceedings by first issuing the respondent with a payment claim dated 6 March 2019. The respondent served its Payment Response dated 22 March 2019 disputing the claim. [7] On 7 May 2019, the appellant issued a Notice of Adjudication. An adjudicator was appointed on 29 May 2019. [8] Following the appointment, the appellant issued an Adjudication Claim on 26 June 2019 and the respondent responded with an Adjudication Response on 10 July 2019. The appellant served its Adjudication Reply on 16 July 2019. [9] In its Adjudication Response, the respondent explained its reasons for disputing the appellant’s claim, be it the sum as claimed or the amount recommended by the Project Quantity Surveyor. Aside from asserting that there was no sum due and payable to the appellant, the respondent cited clause 36.5 of the Construction Contract as the “crucial provision” as well as several other clauses that it considered relevant, namely clauses 1.2(a),

3.3, 5.1(b), 5.2, 6.1, 10.0(a), 31.0 and 33.0. The respondent added that “it is significant to note that the Claimant is not invoking the above provisions in support of its claim”. [10] The respondent further cited a lack of proof of AI, EI or relevant direction [paragraph F]; that there was abuse of process as the claim ought to have been brought via an earlier adjudication claim; and because the clauses relied on either “has no bearing” or are in dispute [paragraph G]. It was the respondent’s case that the appellant was not entitled to be paid because it was the appellant who was in breach of contract. The concrete utilised by the appellant was alleged to be not in compliance with the contract specifications and requirements and since the report was in relation to the supplied concrete specifications in question, the respondent was not obliged to pay. Further, the claim was without merit as the latest “Revised Final Draft Claim” issued by the Project Quantity Surveyor had totally deleted the sum claimed. [11] The adjudicator held it was “better to understand, examine and peruse” the respondent’s reasons or defences for failing, neglecting and/or refusing to pay for the cost of the independent consultants as claimed by the appellant. Those reasons or defences were categorised as follows: i. Whether the appellant's claim falls within the ambit of CIPAA [paragraph A]; ii. Whether the appellant’s claim initiated in the present adjudication proceedings is considered an abuse of process and is res judicata [paragraph B]; iii. Whether the doctrine of res judicata and issue of estoppel has an effect and applied on the respondent’s defence on the issue of under grade concrete [paragraph C]; iv. Whether the appellant is entitled to its claim for the cost of independent consultants [paragraph D]. [12] After examining the legislation and relevant case law, the first issue was answered as follows:

There is no further elaborate and substantiate to this point of defence in its AR. It is remained baseless contentious issue raised by the respondent.

Premise on the above, I am of the considered view that the respondent raised this point of defence in its Payment Response without further substantiated, is unmeritorious and untenable. By foregoing reason, I am hold to dismiss this point of defence raised by the respondent in its Payment Response. [13] The second and third defences were similarly dismissed as “unmeritorious” [see paragraph 85] and “untenable” [paragraph 97]. As for the last issue of whether the appellant was entitled to payment, this is what the adjudicator said:

There are three essential ground raised by the Respondent which is the most relevant and in connection to the Claimant’s claim for the cost of Independent Consultant as following:  The provision of the Contract is Clause 36.5 of COC,  The Claimant has not produced any AI or EI or relevant direction by the Respondent’s consultants, and  There is no certificate issued by the Respondent and/or Respondent’s consultants and in the absence of any certificate payable to the Claimant regards to the Independent Consultants fees, in result there is no debt owing to the Claimant. [14] In relation to the first of these three defences, the adjudicator said:

The Respondent argued that the correct and crucial provision of the Contract is Clause 36.5 of COC and that the Claimant has not invoking this provision in support of its claim. However, in my considered opinion, the Clause 36.6 of COC are the one most applicable to the Claimant’s claim. Clause 36.6 of COC which provides as below: “36.6 Notwithstanding anything in clause 36.5, if the Contractor carries out any further test as required by the S.O. pursuant to clause 36.2 and the result of such test shows the workmanship or materials is not in accordance with the provisions of the Contract, then the cost of such test shall be borne by the Contractor. But if the result of such test shows the workmanship or materials comply with the provisions of the Contract, then the cost of such test shall be borne by the JKP Sdn Bhd” (emphasis added) [15] On the remaining two defences, the adjudicator found that documentary evidence of instruction to the appellant to prepare and conduct the relevant report vide the Architect and C&S consultant’s letters dated 26 August 2016 and 9 December 2016, the contents of which were set out at paragraph 102 of the decision. At paragraph 105, the adjudicator concluded that the appellant had proved on balance of probabilities that it had produced the report the cost of which was the subject of the claim, was “as instructed by the Respondent’s consultants”. [16] The appellant applied to have the decision enforced under section 28 of CIPAA while the respondent applied to have it set aside under 15 of the same. The respondent cited the following grounds: i. there has been a denial of natural justice; ii. the adjudicator had acted in excess of jurisdiction; iii. the adjudicator had not acted independently or impartially. Decision of the High Court [17] The learned Judge dismissed the respondent’s application finding that the failure to specifically plead clause 36.6 of the Construction Contract was not fatal to the appellant’s case. It was sufficient that the whole Construction Contract had been pleaded. The learned Judge also found that there was no breach of natural justice; that in any case, the respondent had failed to show how the adjudicator had acted unfairly and how there was any substantial prejudice to the respondent. The High Court then proceeded to grant the enforcement order. Decision of the Court of Appeal [18] The Court of Appeal reversed the decisions of the High Court. It found that the adjudicator had acted in excess of his jurisdiction when he decided on a matter that was not raised or pleaded in the Payment Claim, in particular clause 36.6. The non-plea was a statutory non-compliance of section 5(2)(b) was “fatal” according to the Court of Appeal. It found that “it is clear from the decision of the Federal Court in View Esteem that the adjudication pleadings in sections 9 to 11 of CIPAA are pivotal and not mere formal manifestations of the dispute”. With this non-compliance, the Court of Appeal held that the adjudicator thus had no jurisdiction to adjudicate on clause 36.6. [19] The adjudicator was also found to be in breach of natural justice by that unilateral reliance on clause 36.6. According to the Court of Appeal, the adjudicator had gone “on a frolic of his own and failed to apply the rules of natural justice… that he had committed a material breach of the rules of natural justice by failing to notify or bring to the attention of the parties that he was relying on the un-pleaded clause 36.6 of the Contract, which was the basis of his decision to allow the respondent’s claim, without allowing the parties the opportunity to comment or to take their respective stands”. Although the adjudicator had powers under section 25 to take the initiative to ascertain the facts and the law required for his decision, the Court of Appeal disagreed with the submissions of the appellant that “such power extends to enable the adjudicator to unilaterally cherry-pick a specific clause of the underlying contract to make out a cause of action for a claimant where the claimant has been put on notice that the clauses relied upon are not applicable”. Analysis & Determination [20] The analysis and resolution of the three questions of law requires a return to the fundamental principles of statutory adjudication introduced in Malaysia, solely and exclusively for and in the realm and practice of construction contracts as defined in section 4 of CIPAA. This mechanism is not available elsewhere unless of course parties choose collaborative contract resolutions or any other specialised regime in their bespoke contracts. [21] CIPAA, though it had received Royal Assent on 18 June 2012 did not come into force until 15 April 2014. Its long title explained that it is 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. The construction industry enjoys the availability of this “extra” dispute resolution mechanism or forum because of the role it plays in the economy, as explained in Parliament at the time the legislation was first introduced for consideration. Excerpts of the debate in Parliament may be found in UDA Holdings Sdn Bhd v Bisraya Construction Sdn Bhd & Anor & Another Case [2015] AMEJ 27; [2015] 5 CLJ 527; [2015] 11 MLJ 499; and in Martego Sdn Bhd v Arkitek Meor & Chew Sdn Bhd & Another Appeal [2019] 8 CLJ 433. [22] Those principles have been carefully explained in the decisions of this Court, endorsing the views first expressed in UDA Holdings Sdn Bhd v Bisraya Construction Sdn Bhd & Anor & Another Case [supra]: CIPAA is intended to provide an intervening provisional decision or “a temporary balance … in appropriate circumstances … in favour of those who claim payment, at the temporary expense if necessary of those who pay”. These adjudication decisions, “being quick and dirty”, also provide a quick enforceable interim decision under the rubric of “pay now, argue later”, are necessary so as to give “life” back to the enterprise or underlying contract which has reached an impasse or stalemate. It is in the very nature of the scheme or mechanism that the substantive issues relating to the payment can still be argued at a later point; or taken concurrently at separate proceedings initiated in Court or at arbitration. [23] Amongst the decisions of the apex Court are View Esteem Sdn Bhd v Bina Puri Holdings Bhd [2017] 8 AMR 167; [2018] 2 MLJ 22; Martego Sdn Bhd v Arkitek Meor & Chew Sdn Bhd & Another Appeal [supra]; and Jack-in-Pile (M) Sdn Bhd v Bauer (Malaysia) Sdn Bhd & Another Appeal [2020] 1 CLJ 299, just to name a few. [24] In Martego Sdn Bhd v Arkitek Meor & Chew Sdn Bhd & Another Appeal, this Court said that the “raison d’être of the CIPAA 2012 regime lie in facilitating and providing remedies for the recovery of payment in the construction industry”; that CIPAA brought three major changes to the construction industry in Malaysia, amongst which was “a speedy resolution through adjudication for construction disputes relating to payment for works carried out under the construction contract”. Further, this Court opined that CIPAA was- “…enacted by the Parliament to provide an easily accessible, faster and cheaper resolution forum, i.e. the adjudication. The following characteristics of the CIPAA 2012 is in tandem with the said intent:

it involves tight time constraints. The deadline for each step is fixed and the timeline for each stage is relatively short to ensure that the disputes are resolved rapidly and quickly;

it involves a significant degree of informality;

it gives adjudicator’s determination a degree of conclusiveness;

it involves rights which are interim only. The rights and liabilities under the Act do not affect other entitlement a person may have under a construction contract or any other remedy a person may have for recovering such entitlement;

the standard adjudicator’s fee is introduced and the charges are cheaper than arbitration. Low cost decision making is a core object of the scheme in the Act; and

the grounds on which the Court can rely upon to set aside the adjudicator’s determination are limited. The Court’s primary duty must be to uphold the adjudicator’s determination and not to revisit the factual or legal matters canvassed before the adjudicator. [51] It is clear, therefore, that the issue of cash flow is the primary objective of the CIPAA 2012 as it is deemed to be the life-blood of the construction industry. This position has been recognised by our courts.” [25] In Martego Sdn Bhd, this Court also reminded that when interpreting any legislation, there must be regard to the purpose of an Act; that such approach is in fact already statutorily enacted in the terms of section 17A of the Interpretation Acts of 1948 and 1967 [Act 388]. This is an approach long since adopted by this Court and the good and proper administration of justice requires if not demands that there is consistent understanding and application of its own principles. See for instance Tan Kah Fatt & Anor v Tan Ying [2023] 2 MLJ 583; Bursa Malaysia Securities Bhd v Mohd Afrizan Husain [2022] 4 CLJ 657; AJS v JMH & Another Appeal [2022] 1 CLJ 331. [26] In Bursa Malaysia Securities, this Court held that the purposive rule of construction prevails over the literal rule of construction in the interpretation of a statute since there is now section 17A of Act 388. In Tan Kah Fatt, this Court concluded that in interpreting a statute, “the Courts must favour a construction which promotes the purpose, object or intent of the legislation over a construction which does not”; adding that this approach does not wait for the state of ambiguity to present before the purposive approach is adopted and applied. The purposive rule of interpretation applies with equal force in the field of statutory adjudication. [27] The interpretation and application of CIPAA to any fact pattern must thus always have that ethos and intent in mind, that the decision under scrutiny of the Court bears the unusual hallmark of temporary or interim finality; and the Courts should strive to give a reading of the provisions in CIPAA that is consistent with and implements that purpose and intent. The final determination of the payment dispute lies elsewhere, be it in arbitration or in litigation and that the primary function of the Court is to decide, for the purpose of these appeals, whether any of the grounds in section 15 to set aside an adjudication decision has been established. [28] CIPAA is replete with provisions which facilitates this approach. To start with is the adjudication regime itself. It is only available for and to construction contracts as defined in section 4. That definition does not lend itself to an extensive group of contracts; for instance, CIPAA does not apply to a construction contract entered into by a natural person for any construction work in respect of a building which is less than four storeys high and which is wholly intended for personal occupation – see Tan Sri Dato Yap Suan Chee v CLT Contract Sdn Bhd [2021] MLJU 1964. [29] Next, the adjudication regime is only available to payment disputes as delineated in Part II of the Act, that it is meant to resolve disputes relating to claims of non-payment for work done or services rendered under the express terms of a construction contract; and nothing more. Because the mechanism is intended to unravel or uncork the cashflow problems that frequently plague the construction industry, and this industry is known to face dispute over payments as a norm; it was initially thought that the statutory regime was only available for resolution of progress claims and not final claims. [30] This has since been settled by this Court in Martego Sdn Bhd, that there is “nothing to stop the CIPAA 2012 from applying to the case at hand”; the case being one relating to claims for professional fees upon termination of the construction contract. The subject matter in the present appeals similarly concerns claims for professional fees arising from a terminated contract. [31] The time frame under which the dispute is expected to be resolved is relatively short compared to litigation or arbitration, some 109 days. Further, section 8(3) allows the warring parties to represent themselves or be represented by any representative appointed by the party. Legal representation is not a prerequisite even when dealing with corporations unlike litigation in Court. [32] Where a decision is delivered by the adjudicator favouring the claimant, that decision is necessarily about the amount to be paid, time and manner of payment. This is obvious from the terms of section 12(5) and because the dispute is solely about payment for work done or services rendered. [33] The decision of the adjudicator is binding unless any of three circumstances presents. First, where the decision is set aside under section 15; second, where the subject matter is settled by written agreement between the parties; or third, where the dispute is finally decided by arbitration or the Court – see section 13. It is the effect of this section that has led to the statutory adjudication regime being understood as “rough justice”; “pay now, dispute or argue later”; and the concept of interim finality, in almost all jurisdictions that practised it. [34] Another facet of this unique feature of interim finality in statutory adjudication is the fact that persons who are qualified to sit or be appointed as adjudicators are not necessarily legally qualified – see sections 21 and 32(a) of CIPAA and regulation 4(a) of CIPAA Regulations 2014 and discussions on this aspect in WRP Asia Pacific Sdn Bhd v NS Bluescope Lysaght Malaysia Sdn Bhd [2016] 1 AMR 379. This aspect has, in my view, a substantial bearing against any argument or insistence of likening adjudication proceedings to proceedings in a Court of law. Far from it, that it is precisely that it is not proceedings in Court or even in arbitration that statutory adjudication enjoys these especial features that are resoundingly acknowledged by the Courts from the numerous judgments, both reported and unreported. [35] To complement this philosophy, sections 12(1) and 25 of CIPAA contain extensive prescription on the adjudicator’s powers and jurisdiction on how the adjudication is to proceed:

(1) The adjudicator shall conduct the adjudication in the manner as the adjudicator considers appropriate within the powers provided under section 25.

The adjudicator shall have the powers to-

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

order the discovery and production of documents;

set deadlines for the production of documents;

draw on his own knowledge and expertise;

appoint independent experts to inquire and report on specific matters with the consent of the parties;

call for meetings with the parties;

conduct any hearing and limiting the hearing time;

carry out inspection of the site, work, material or goods relating to the dispute including opening up any work done;

inquisitorially take the initiative to ascertain the facts and the law required for the decision;

issue any direction as may be necessary or expedient;

order interrogatories to be answered;

order that any evidence be given on oath;

review and revise any certificate issued or to be issued pursuant to a construction work contract, decision, instruction, opinion or valuation of the parties or contract administrator relevant to the dispute;

decide or declare on any matter notwithstanding no certificate has been issued in respect of the matter;

award financing costs and interests; and

extend any time limit imposed on the parties under this Act as reasonably required. [36] The adjudicator’s duty is really, first and last, to decide the dispute that is referred in the notice of adjudication issued under section 8. This is clear from the terms of section 12(2). [37] With these basic principles settled, I turn now to the questions of law. [38] First, the matter of pleadings. Do the strict rules of pleadings, as applicable in civil claims before the Malaysian Courts, apply in adjudication proceedings under CIPAA? The answer is clearly in the negative. [39] There are no pleadings in statutory adjudication as generally understood and practised in Court proceedings; and it will be wrong to equate adjudication proceedings to proceedings in Court with its attendant principles and ramifications as provided under the Rules of Court 2012, enacted under the Courts of Judicature Act 1964 [Act 91]; and developed through case law. One of those principles is the rule of binding pleadings, that the parties are not allowed to go outside the ambit of their pleaded case. But, even then, that rule has to be properly understood as seen in the case of Superintendent of Lands & Surveys (4th Div) & Anor v Hamit bin Matusin & Ors [1994] 3 MLJ 185, that if the other party has had reasonable notice of the un-pleaded issue to which evidence has been led, a fresh point may be allowed by the Court. That, however, does not arise in these appeals nor in statutory adjudication. [40] The terms “pleadings”, “plea” or “plead” also do not appear in any of the provisions of CIPAA. Contrast this with the Rules of Court 2012 where the term “pleadings” may be found throughout the Rules; for instance, in Order 18 rule 19; Order 14, and more. [41] It will be quite wrong to read into the statutory provisions what is patently not in the provisions. Attempting to read by way of implication or inference is equally impermissible. This has been repeatedly reminded when interpreting and construing statutes, even under the guise of purposive interpretation as prescribed under section 17A of the Interpretation Acts of 1948 and 1967. [42] What is envisaged under CIPAA is the utilisation of two sets of documentation exemplifying the two distinct and discrete processes under the statutory adjudication regime. The first set of documentation is known as the payment claim issued by an unpaid party and the payment response issued by a non-paying party, provided under sections 5 and 6. These documents are exchanged between these parties. It is in section 5(2) that the law provides what needs to be set out in the payment claim:

(2) The payment claim shall be in writing and it shall include-

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

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. [43] In a sense, the payment claim may be likened to a letter of demand. At this stage, there is no payment dispute as yet to refer to adjudication. Under section 6(1), a non-paying party may well admit a payment claim and pay up either the whole or whatever amount is admitted. If that happens, nothing goes to adjudication as a dispute resolution mechanism. The claim is simply settled and that is the end of the matter. Or, the non-paying party may just not pursue the claim any further. [44] Where a dispute arises from the payment claim made under section 5, either wholly or partly or where there is no payment response at all [in which case it is deemed denied], either the unpaid party or the non-paying party may refer that dispute to adjudication – see section 7(1). The initiation of adjudication itself is by the service of a notice of adjudication. Section 8 requires that notice to contain “the nature and description of the dispute and the remedy sought together with any supporting document on the respondent”. Thereafter, an adjudicator will be appointed – see sections 8(2) and 21. [45] After the adjudicator has been appointed, the claimant, defined in section 4 as “an aggrieved party in a construction contract who initiates adjudication proceedings”, is now required to serve a written adjudication claim. This is the second set of adjudication documentation. This time, section 9 requires that adjudication claim to “contain the nature and description of the dispute and the remedy sought together with any supporting documents on the respondent”. It is to be remembered that the respondent may be the unpaid or non-paying party, depending on who initiated the adjudication. Regardless, the “respondent” is required to serve an adjudication response [section 10]; to which the claimant may response with a written reply under section 11. [46] What then is the difference between a payment claim and an adjudication claim? This was discussed in View Esteem Sdn Bhd v Bina Puri Holdings Bhd [supra] where according to the Federal Court, the adjudication claim broadly outlines the “nature and description of the dispute along with the remedy sought” whereas the payment claim contains the details of the claim so that the cause of action can be discerned: [44] It should be noted that on the claimant’s side, the adjudication claim under s 9(1) of the CIPAA requires the unpaid party to state ‘the nature and description of the dispute and the remedy sought’ whereas the preceding payment claim under s 5 of the CIPAA merely requires him to state the amount claimed and the contract involved sufficiently to ‘identify the cause of action’. [47] It is the dispute that arises from the payment claim that the adjudicator is required to adjudicate upon, decide and deliver the adjudication decision within the time prescribed after conducting the adjudication in the manner as the adjudicator considers appropriate using the powers conferred under section 25. This is apparent from sections 12(1) and (2). [48] Since it is the dispute that arises from the payment claim and not the payment claim itself per se that is referred to adjudication, it would be erroneous and misleading to describe or characterise the payment claim and the payment response as pleadings. In fact, I would venture to say even the adjudication claim and adjudication response are not pleadings as one understands pleadings to be under the rules of civil procedure. Consequently, the strict rules of pleadings do not apply in adjudication. [49] Although section 5 requires the details such as the provision(s) in the construction contract to which the payment relates to be set out, and this is not affected by the presence of the term “shall”, this lack of particularity or specificity [especially of clause 36.6 of the Construction Contract] is, in my mind, not at all fatal, contrary to the finding of the Court of Appeal. While section 5 provides for certain requirements to be set out in the payment claim, it is silent as to how much detail should be provided. [50] Chow Kok Fong in his work, Security of Payments and Construction Adjudication [Third Edition, LexisNexis 2022, page 261] writes that the “better view is that, subject to the payment claim being compliant with the requirements of the SOP Act and the SOP Regulations, a claimant is not obliged to provide more information in his payment claim than he considers necessary for the respondent to understand the thrust of the claim”. From all accounts, the respondent clearly understood the thrust of the appellant’s claim for professional fees and had no problem at all, responding to the claim in a meaningful manner as is obvious from the payment response, and later from the adjudication response issued. [51] One must understand and appreciate the statutory adjudication regime as a whole, how it operates and the conditions of application including the timelines involved, as discussed above, such that the specificity of the contract provisions need not even be exhaustive. In fact, it may even be the wrong provisions cited and the adjudicator may or may not agree with those provisions; may or may not deal with any or all the provisions cited; and/or the provisions cited may not even be of any concern to the responding party; as was the case in the present appeals. [52] This is not a case of the appellant not citing any provisions of the Construction Contract. The appellant did identify particular clauses of the Construction Contract [including clause 36.6 – see subsequent discussion] and the fact that the adjudicator, assuming for a moment had determined the claim upon that clause, which I find he actually did not, is not at all fatal to the appellant. [53] As mentioned, this is not a situation where the appellant had failed to comply with section 5(2)(b); it did but the appellant is said to have not specified clause 36.6. How can any reference by the adjudicator to that clause amount to a fatal omission on the part of the appellant? In civil litigation, it is so called ‘fatal’ where a party relies on an un-pleaded issue; it is not when the Court or the judge does. That reference or reliance by the Court or judge may be some judgment error probably capable of correction by an appellate Court but it is not fatal to the Court or judge. [54] Consequently, the Court of Appeal was clearly in error when it concluded that the adjudicator’s reference or reliance to clause 36.6 was fatal to the appellant. I will return to this issue when dealing with the jurisdiction and powers of the adjudicator but for now, it is my view that the Court of Appeal had taken a pedantic technical approach without proper and due regard to the whole scheme, the intent of CIPAA, its operation and application in the terms as discussed above; and had quite clearly misdirected itself. [55] In this regard, the approach of the Australian courts on the matter of how much needs to be specified or particularised in a payment claim is also of helpful assistance. In Hawkins Construction (Aust) Pty Ltd v Mac’s Industrial Pipework Pty Ltd [2002] NSWCA 136, the New South Wales Court of Appeal cautioned against taking an unduly technical approach on the degree of specificity; that the statutory provisions on this requirement should be given their normal and natural meanings: “As the words are used in relation to events occurring in the construction industry, they should be applied in a common-sense practical manner.” [56] This “common-sense” approach on the construction of the requirements as to form has been followed in other States of Australia where statutory adjudication is in force. See for instance, John Holland Pty Ltd v Cardno MBK (NSW) Pty Ltd [2004] NSWSC 258; and Protectavale Pty Ltd v K2K Pty Ltd [2008] FCA 1248. [57] In Protectavale, the Federal Court of Australia indicated that the payment claim must be sufficiently detailed to enable the non-paying party to understand the basis of the claim; adding that “if a reasonable principal is unable to ascertain with sufficient certainty the work to which the claim relates, he will not be able to provide a meaningful payment schedule. That is to say, a payment claim must put the principal in a position where he is able to decide whether to accept or reject the claim, and if the principal opts for the latter, to respond appropriately in a payment schedule … That is not an unreasonable price to pay to obtain the benefits of the statute”. The equivalents of “principal” and the “payment schedule” are the “non-paying party” and “payment response” under our CIPAA. [58] What is of further relevance is the background of the parties involved in the adjudication regime. In Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140, Palmer J held that the precision and peculiarity of a payment claim need not approach that of a pleading in Court because of the backgrounds of the parties normally encountered in a construction contract and the fact that the payment claim and payment response had to be produced quickly. His Lordship however held that the information provided should be “sufficient to apprise the parties of the real issues in the dispute: “A payment claim and a payment schedule are, in many cases, given and received by parties who are experienced in the building industry and are familiar with the particular building contract, the history of the construction of the project and the broad issues which have produced the dispute as to the claimant’s payment claim, a payment claim and a payment schedule must be produced quickly; much that is contained therein in an abbreviated form which would be meaningless to the uninformed reader will be understood readily by the parties themselves. A payment claim and a payment schedule should not, therefore, be required to be as precise and particularised as a pleading in the Supreme Court. Nevertheless, precision and particularity must be required to a degree reasonably sufficient to apprise the parties of the real issues in the dispute”. [59] McDougall J took a similar approach in Leighton v Arogen [2012] NSWSC 1323: “It may be accepted that payment claims and payment schedules are to be understood as the parties to the relevant construction contract would have understood them. Thus, documents which appear to be extremely summary, or to the uninformed but not unintelligible observer brief to the point of incomprehensibility, may be sufficiently meaningful to the parties to enable them to know, respectively, the bases on which a particular payment claim is advanced and the bases on which it is opposed. In this context, it may well be appreciated to take into account, in particular factual circumstances, the background knowledge of the parties (for example) by correspondence passing between them before and at the time the payment claim and payment schedule were exchanged …” [60] In yet another case authority, in Walter Construction Group Ltd v CPL (Surry Hills) Pty Ltd [2003] NSWSC 266, Nicholas J stated that the purpose of the requirement is that a respondent served with a payment claim is provided with adequate information to enable a payment schedule to be filed in response to the claim. [61] Although the statutory adjudication regime in New South Wales differs in some respects, the overall scheme and intent is similar; and I find these authorities of much persuasive sense and authority. [62] Locally, there is the decision in Terminal Perintis Sdn Bhd v Tan Ngee Hong Construction Sdn Bhd & Another Case [2017] 1 LNS 177 where Lee Swee Seng J [as His Lordship then was] cautioned against taking a strict view of the contents of the documentation in CIPAA: [57] The Court should not exact a stricter requirement of pleadings on adjudication than if it were a Court proceeding. One should not be unduly critical or technical to the point of exacting an overly demanding treatment of a payment claim when it comes to whether it has met the requirements of section 5(2)(b) CIPAA… [58] Moreover the payment claim is prepared by the claimant itself and not served through solicitors. Section 8(3) further allows a party in the adjudication proceedings to represent himself or by appointing his representative. The intent is to save costs and not to make it unduly technical or convoluted… [63] I agree with the views subscribed in Terminal Perintis, finding it to be sound and of common-sense. See also discussion on this in “Construction Adjudication in Malaysia” by Lam Wai Loon & Ivan YF Loo (3rd Edition Sweet & Maxwell, paragraph 388 - 398). [64] Under CIPAA, the details required to be set out in the Payment Claim are those that will identify the cause of action. In Terminal Perintis, Justice Lee opined: “[59] No doubt the expression of a “cause of action” is used in section 5(2)(b) CIPAA but that is nothing more than saying that the claimant must set out the basis of their claim in contract. … [61] If the payment claim were to be a Statement of Claim, I do not think that the defendant would be able to strike out the claim on the ground that there is no valid cause of action pleaded. In fact the test would be that the Court assumes the pleading of facts to be true and based on such a plea, would there by a cause of action. I do not think we should exact a stiffer requirement of adjudicators when it comes to determining whether there was a valid payment claim for the adjudicator to assume jurisdiction. Beyond that, it becomes a question of evidence and finding of fact or a mixed question of fact and law which this Court has no business to interfere unless the grounds for setting aside are made out under section 15 CIPAA. Whether or not the claim could succeed would be for trial in a case of litigation in as much as in an adjudication, it would be for the adjudicator to decide”. [65] In my view, the inclusion of the words “including the provision in the construction contract to which the payment relates” in section 5(2)(b) is actually intended to be illustrative of what those details may be. The reason why the cause of action has to be identified is so that the non-paying party is able to respond to the claim for work done or services rendered. Consequently, the details set out should be “sufficient for the respondent to meaningfully verify or reject the claim”; that the details are “adequate” to enable the respondent to respond to the Payment Claim. And, as already pointed out, the respondent had absolutely no difficulty at any stage, be it at payment response or adjudication response. [66] This construction is not altered by the presence of section 27 which reads as follows:

(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.

The parties to adjudication may at any time by agreement in writing extend the jurisdiction of the adjudicator to decide on any other matter not referred to adjudication pursuant to sections 5 and 6. [67] Section 27 states that the jurisdiction of the adjudicator in relation to any dispute is limited to the matter referred to adjudication pursuant to sections 5 and 6. The matter in dispute which was referred to adjudication in these appeals was the claim for professional fees due under a terminated contract. That is as clear as daylight and the respondent was fully aware of that being the real and sole issue. Furthermore, it was totally able to give a meaningful response to that claim. [68] In my view, non-citing or even the citing of a wrong clause or provision of a construction contract does not and cannot render the adjudicator bereft of jurisdiction. It is the absence of a matter in dispute between the parties which may have that effect but that is not at all the case here. As mentioned, the matter in dispute in the present appeals is the payment for the professional fees; the appellant asserting that this payment is due and payable on a terminated contract while the respondent denies the same. It is this lack of consensus or put another way, the presence of a dispute or a matter in dispute which forms the appellant’s cause of action for payment for professional fees under a terminated contract. [69] An examination of the payment claim and even the ensuing documents confirms the above analysis. In fact, I must add that all along, clause 36.6 was already cited in the payment claim and adjudication claim. Had these documents been properly examined, the Court of Appeal would clearly not have come to the decision that it did. [70] In this regard, care must be taken to scrutinise the claim and its accompanying documents, appreciate and understand their contents and not merely cast a cursory view over them. There is a difference between scrutinising for that purpose as opposed to examining and interfering in findings in those documents, including the adjudication decision. This scrutiny is necessary especially where there is a myriad of details raised. [71] In the payment claim, the appellant sets out details of its claim for payment under the following captions: A. The parties B. The construction contract between the parties C. Status of the contract D. The background prior to this payment claim E. The computation of amount claimed F. The amount claimed is due and payable. [72] It is relevant to note that in describing the parties at (A), the appellant cited the Construction Contract as well as a host of other documents; amongst which are letters exchanged between the parties. The letters from the appellant are dated “5/12/2016, 13/12/2016, 20/12/2016, 16/1/2017 and 17/1/2017” whilst the letters from the respondent are dated “15/5/2017 and 15/9/2017”. These letters were attached to the payment claim and were subsequently before the adjudicator. These letters are part and parcel of the payment claim and their contents must be carefully examined. [73] Next, the appellant’s claim for professional fees arises in the context of a terminated contract, terminated by the appellant on account of an alleged default by the respondent. Hence, its reliance on clauses 55, 56 and 28, in particular clause 55(b) – see paragraphs 5, 24 to 31 of the payment claim. According to the appellant, where the Construction Contract is terminated, the respondent “ought to have within reasonable time, certified the Final Claim amount submitted” by the appellant – see paragraph 28. A draft statement of final account where the project surveyor had recognised and endorsed the amount of RM795,013.78 as the amount of professional fees due for payment by the respondent was relied on by the appellant – see paragraph 25 of payment claim. [74] At paragraph 29, the appellant claimed to have made numerous verbal demands and sent written demands for payment dated 2/10/2017, 21/11/2017 and 19/12/2017. The respondent’s inaction, deafening silence and non-reply is said to be “indicative of the non-paying party’s acceptance of the aforesaid sums and heads of claim…” [75] To all this, the respondent served a payment response arguing that the claim “is totally without merit” for the following reasons: i. the draft statement of final account was never submitted by the respondent to the appellant – paragraph 3; ii. there is a revised final draft account where the appellant’s claim “have been totally deleted” – paragraphs 4 & 6; iii. the claim for professional fees does not fall within the meaning of ‘construction contract’ under section 5(1) CIPAA; that in short, CIPAA has no application – paragraph 5. [76] In the adjudication claim, the appellant went into detail on inter alia: i. background of the Construction Contract; ii. history of adjudication claims successfully initiated against the respondent [4 in total] in view of non-payment of progress claims by the respondent; iii. termination of the Construction Contract; iv. respondent’s complaint of ‘under grade concrete’ which “is without merit” in light of the independent consultant’s report; v. recommendation and valuation of payment for the professional fees in the draft statement of final account by the project surveyor; vi. challenge on the revised statement of final account issued after the project surveyor’s recommendation for payment as “an afterthought and with a collateral purpose… suspicious, without substantive basis and clearly a tool to undermine and defeat the claimant’s valid and justified claim against the respondent”; vii. reliance on clauses 28, 55 and 56 of the Construction Contract. [77] Once again, the appellant’s letters dated 5/12/2016, 13/12/2016, 20/12/2016, 16/1/2017 and 17/1/2017 were enclosed and collectively marked as Enclosure 19 – see paragraph 30 of the adjudication claim. [78] The respondent served an equally detailed adjudication response. Amongst the issues raised were: i. there was a history relating to “understrength concrete strength” and an assertion that there was a failure by the appellant to carry out concreting in accordance with the contract specifications; ii. the consultant’s report is disputed; iii. crucial provision of the Construction Contract is clause 36.5; iv. other relevant provisions being clauses 1.2(a), 3.3, 5.1(b), 5.2,

6.1, 10.0(a), 31.0 and 33.0; which the respondent noted appellant was not invoking; v. appellant must bear the costs of the professional fees because the appellant itself initiated the production of the reports in question by its own consultants; vi. abuse of process as the claim ought to have been the subject matter of adjudication claim no. 4; vii. clauses relied on by the appellant not relevant as the termination “was and is unlawful”; viii. there is no valid certificate or document to support the claim for professional fees. [79] There is a detailed adjudication reply where the appellant reiterated its ‘stand and position”; and inter alia claimed that the concreting issue was a “design fault” and not due to “under grade concrete”; that from the line of correspondence in enclosure 23, the engagement of the consultant was “with the knowledge, instructions and approval from the respondent”, especially instructions vide letters dated 26.8.2016 and 9.12.2016. [80] A fuller picture of the dispute and the concerns raised emerges when one examines the correspondence exchanged, especially the letters sent by the appellant – see paragraph [72] above. In my opinion, these letters are necessarily part of the payment claim and adjudication claim and due and proper regard must be given to them. When examined, it puts paid to the respondent’s complaints about clause 36.6, supposedly referred to by the adjudicator “unilaterally”. This is actually incorrect on the facts. [81] The letters show that the appellant had actually invoked clause 36.6 of the Construction Contract amongst several other provisions - see letters dated 16.1.2017 and 17.1.2017. [82] This is letter dated 16.1.2017: Our Ref. ACSB/JKP/01/302 Date: 16th January 2017 En. Azman bin Ibrahim Chief Executive Officer No. 128, Bangunan Menara UMNO Jalan Macalister 10400 Pulau Pinang CADANGAN MEMBINA DAN MENYIAPKAN SATU (1) PANGSAPURI 24 TINGKAT KOS SEDERHANA (382 UNIT) DI ATAS TANAH TEBUSGUNA KERAJAAN NEGERI, KAMPUNG PISANG AWAK, SEKSYEN 4, BANDAR JELUTONG, DAERAH TIMUR LAUT, PULAU PINANG RE: OUTSTANDING PAYMENT FOR PROFESSIONAL FEE UNDER CLAUSE 36.6 Your consultant’s SSJ Consulting Engineers Sdn Bhd (SSJ/14/JKP-PISANGAWAK/ACSB/24) dated 26th August 2016 is referred. You have, through your consultant; SSJ Consulting Engineers Sdn Bhd; required us to carry out further tests for the issue mentioned in the above stated letter dated 26th August 2016. We have vide our letter (ACSB/JKP/01/286) dated 5th December 2016 notified you our intention to claim under clause 36.6 of the Conditions of Contract for the Professional Fee by Perunding Kejuruteraan MSY in the amount of RM11,660.00. We shall include this claim in our next interim payment application. Thank you. Yours Faithfully, ………………………….. Dato’ Mohamed Iqbal S. Habeeb Noohu (D.S.D.K) Managing Director [83] This is letter dated 17.1.2017: Our Ref: ACSB/PKP/01/306 Date: 17th January 2017 En. Azman bin Ibrahim Chief Executive Officer No. 128, Bangunan Menara UMNO Jalan Macalister 10400 Pulau Pinang CADANGAN MEMBINA DAN MENYIAPKAN SATU (1) PANGSAPURI 24 TINGKAT KOS SEDERHANA (382 UNIT) DI ATAS TANAH TEBUSGUNA KERAJAAN NEGERI, KAMPUNG PISANG AWAK, SEKSYEN 4, BANDAR JELUTONG, DAERAH TIMUR LAUT, PULAU PINANG RE: REPLY to NCR and SSJ’s LETTER both dated 11th January 2017 The NCR ref no. JKPSB-FORM-PP-16 and SSJ Consulting Engineers Sdn Bhd’s letter both dated 11th January 2017 are referred. We hereby notify that your NCR and letter stating the concrete core lest results failed need your reconsideration because as indicated by our consultant’s advice in accordance to the B.S Code a lower concrete test result than the specified concrete grade is not a definition of failure or non-conformance. In support thereof, a letter by Perunding ZNA is attached hereto as Schedule I for your perusal. In additional you have, through your architect’s letter (RMS/PG1003- 2A/F/ANAS/45) dated 9th December 2016 required us to conduct further tests for the concrete issue and therefore we hereby invoke clause 36.6 of the Conditions of Contract. As the test report shows the concrete has not failed and so accordingly the cost incurred shall be borne by you in accordance with clause 36.6 of contract. We shall submit our cost to you in another letter in due course and shall include the cost in our next interim payment. For the above stated reasons, we hereby urge you to immediately withdraw the NCR. In the interim note that you have earlier issued us a stop work order. Thus we hereby invoke clauses (43) and (44) of the Conditions of Contract. For the avoidance of double we deny any fallibility on the concrete issue. Thank you. ………………………….. Dato’ Mohamed Iqbal S. Habeeb Noohu (D.S.D.K) Managing Director [84] Although the payment claim and other related documents used in statutory adjudication are not in the nature of pleadings as practised in civil litigation, and this has already been extensively explained above, this correspondence was nevertheless cited in the payment claim – see paragraph 4.6 of the payment claim and paragraph 30 of the adjudication claim. In these two letters which form part of the payment claim and later adjudication claim, clause 36.6 was quite clearly cited. [85] I must also add that it was in any case the respondent themselves who had cited clause 36 in their adjudication response – see paragraph 18. Though the respondent had specifically identified clause 36.5, it is unreasonable to require or insist the adjudicator wears blinkered lenses and ignore the rest of clause 36. Having drawn the adjudicator’s attention to clause 36.5, it is unreasonable to say that the adjudicator is not entitled to look at clause 36 as a whole; and worse, to subsequently claim breach of natural justice when he did. [86] To this, I must further add that the whole construction contract was already before the adjudicator, “pleaded” as it were and it will be naïve to suggest that the adjudicator is not entitled to look to the whole Construction Contract for all its full terms and effect. More so when he was dealing with the payment claim for professional fees in the context of a terminated contract. Clauses 55 and 56, indeed provide for consequences of termination and the need to certify costs, which the appellant complained was not undertaken by the respondent. Clause 55(c) certainly provides that the respondent “shall pay” to the appellant-

the value of the Works carried out up to the date of termination;

the amounts payable in respect of any preliminary items so far as the Work or service comprised therein has been carried out or performed and a proper proportion of any such items which have been partially carried out or performed;

the cost of materials or goods reasonably ordered for the Works which have been delivered to the Contractor or of which the Contractor is legally liable to accept delivery (such materials or goods becoming the property of the Government upon such payment being made to the Contractor); and

a sum being the amount of any expenditure reasonably incurred by the Contractor in so far as such expenditure has not been recovered by any other payments referred to in this sub-clause. [87] Bearing in mind that the merits of the dispute including the question of validity or otherwise of the termination by the appellant and whether there is any breach of the Construction Contract by the respondent is determined elsewhere in arbitration and/or litigation, and that the decision in the statutory adjudication is intended to be of a temporary finality, it is immaterial that the invocation of clause 36.6 was in letters written before termination on 15.5.2017; or that the adjudicator was simply looking at the whole Construction Contract which was already placed before him by the parties. It is not as if the adjudicator was referring to a document which was not at all before him. This is quite aside from his extensive powers under section 25 which amongst others, allows him “inquisitorially take the initiative to ascertain the facts and the law required for the decision”. [88] Whilst the Court in a setting aside application under section 15 of CIPAA is not concerned with the substantive merits of the reliance on any of the provisions of the underlying contract and also findings of fact by the adjudicator, and this will include clause 36.6, the fact remains that clause 36.6 was actually cited in the “pleaded” claim and was not plucked out of the air by the adjudicator, whether through cherry-picking or any frolic. It is also important to note that the respondent never disputed that reliance; whether in the payment response or adjudication response; or even in its correspondence. [89] Thus, on the facts, the Court of Appeal was clearly in error when it concluded that clause 36.6 was not raised or “pleaded”; that the adjudicator had unilaterally relied on clause 36.6 and had gone on a frolic of his own thus acting without jurisdiction and committed a material breach of natural justice. On the contrary, the payment claim clearly complied with the statutory requirements and the respondent was not in any way impaired or unable to respond to the claim. [90] For all the reasons above, Question 1 must be answered in the negative. [91] I move then to Question 2, that is, “Whether the dicta in View Esteem Sdn Bhd v Bina Puri Holdings Bhd [2018] 2 MLJ 22 prohibits an adjudicator from referring to a specific clause in a construction contract when allowing a claim, when the said clause was not specifically stated in the Payment Claim and Adjudication Claim by the claiming party?” [92] In view of my answer and reasons in relation to Question 1 and my further finding that clause 36.6 was actually “pleaded” or raised in the payment claim as well as in the adjudication claim, Question 2 actually does not arise. [93] Be that as it may, I note that the Court of Appeal had relied on this Court’s decision in View Esteem to hold that the adjudicator’s jurisdiction is limited to the cause of action identified in the payment claim; that because the appellant had failed to plea clause 36.6, the adjudicator had no jurisdiction to adjudicate on the said clause. Paragraphs 55 to 58 of View Esteem were cited in support: [55] By s 27(1) of the CIPAA, the arbitrator’s [sic] 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 the CIPAA is defined and limited by the claim under s 5 of the CIPAA. [56] In short, s 27(1) of the 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 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.

[57] It can thus be said that the appellant’s case regarding the jurisdiction referred to in s 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 ss 5 and 6 of the CIPAA. [94] Relying next on section 9 of CIPAA which the Court of Appeal said the Federal Court in View Esteem [paragraphs [41] and [46]] regarded together with sections 10 and 11 as “pivotal and not mere formal manifestations of the dispute”, the Court of Appeal found the non-plea of clause 36.6 as “fatal” to the appellant’s case. At paragraph [32], the Court of Appeal held that the “adjudicator had acted in excess of his jurisdiction when he decided on matters never raised and pleaded in the PC, the Payment Response (“PR”) and all the adjudication pleadings”. [95] With respect to the Court of Appeal, that conclusion is erroneous. Aside from my earlier deliberations on the issue of “pleadings” in adjudication, that there is none and certainly not “pleadings” with the attendant principles and ramifications under the Rules of Court 2012 and the relevant caselaw, I find that the Court of Appeal has conflated subject matter jurisdiction as provided under section 27 with documentational and procedural requirements under section 5. [96] I have dealt with this aspect to some extent earlier; that even if the adjudicator had for a moment and for argument’s sake, referred to or relied on clause 36.6 and such clause was not raised by the appellant in the payment claim or even the adjudication claim [the facts show otherwise] such reference or reliance is not fatal to the appellant’s case by reason of non-compliance of section 5(2)(b). Section 5 deals with the requirements in a payment claim whilst section 27 deals with jurisdiction of the adjudicator. Both provisions are distinct and separate. [97] The dicta in View Esteem has been mis-appreciated by the Court of Appeal. The Federal Court was actually correcting the reasoning of the High Court which had taken the view that the adjudication claim and adjudication responses were mere formal manifestations of the dispute already set out in the payment claim and the payment response. At the High Court, the appellant was disallowed from raising defences or issues in the adjudication response which were not raised in the payment response. In fact, the appellant had not served any payment response and under section 6(4) was deemed to have denied the claim. The Federal Court disagreed, holding that the appellant was entitled to raise any defence or issue not raised earlier as the existence of the two-stage process did not warrant giving a reduced importance to the adjudication pleadings and a greater, if not overriding significance to the initial documents, namely the payment claim and the payment response, under sections 5 and 6. [98] The effect of this Court’s decision in View Esteem in respect of section 27 is simply this – that the adjudicator’s jurisdiction in relation to any dispute is limited to the matter of the claim which was referred to adjudication under sections 5 and 6. The subject of the claim is the limiting factor. This was explained by the Federal Court to refer to the cause of action identified by reference to the applicable clause of the construction contract. [99] An example was given to illustrate what this meant, that if the payment claim relates to progress claim No. 28, then adjudicator’s jurisdiction is limited to this progress claim “and nothing else”. The payment response is likewise limited to an answer to this progress claim and no other. The details of the subject of the claim are those provided under section 5(2)(a) to (d). The Federal Court added that “section 27(1) of the CIPAA has nothing to do with the grounds of the claim or the reasons to oppose the claim”. I understand “grounds of the claim” to be the supporting basis for the claim; and the insufficiency or absence of grounds do not deprive of the adjudicator of jurisdiction. [100] In these appeals, the subject of the claim and the cause of action was always about the single dispute over the claim for professional fees. Nothing else. The jurisdiction of the adjudicator was to adjudicate on this subject claim and not say, adjudicate on the lawfulness of the termination, or even the issue of breach. The appellant had set out the amount, due date for payment, details of the cause of action for this claim for the professional fees with certain clauses of the underlying contract identified, description of the work and, a statement that the claim is made under the Act. All this information had to be compressed or summarised as “the nature and description of the dispute and the remedy sought” when preparing the adjudication claim, as required under sections 8 and 9. [101] The respondent, not in the least confused and being fully aware of the thrust of the appellant’s claim, put up a meaningful response. Unfortunately, none of the responses as detailed by the respondent passed muster with the adjudicator, and the claim was allowed. This, does not render the payment claim and ultimately the adjudication decision reached liable to be set aside for the reasons complained of by the respondent and agreed to by the Court of Appeal. [102] Consequently, the answer the Question 2 must also be answered in the negative. [103] Finally, Question 3: In a CIPAA award, does the Adjudicator’s consideration of a specific clause in the construction contract, not specifically stated in the Payment Claim or Adjudication Claim, without inviting parties to further submit on the said clause, amount to a breach of natural justice or an act excess in jurisdiction, such that the said award ought to be set aside? [104] Once again, I refer to my earlier findings that the existence of clause 36.6 which purportedly formed the basis of the adjudicator’s decision was actually cited in the payment claim. Hence, there was and is no basis for the respondent’s complaint and the disposal in the manner that the Court of Appeal did. [105] Again, for the development of the law, I will nevertheless answer this question. And, once again, my answer is in the negative for the following reasons. [106] It is unfortunate that principles more commonly associated with public law are now more frequently resorted to in the field of private commercial law where bargains are struck at arm’s length and with consideration. Although these principles may apply in appropriate circumstances and conditions with legislation such as CIPAA providing for its invocation for the setting aside of adjudication decisions as was the occasion in these appeals [see section 15], the law surrounding their application actually is necessarily different. [107] The principles of natural justice are normally understood in relation to the fairness of the procedures involved; the concept of audi alteram partem and nemo judex in sua causa, that there must be a fair hearing and no bias or conflict of interest on the part of the adjudicator. It would be wrong to say that these principles do not apply to adjudication proceedings; they obviously do. To a large extent, these principles as applied in the field of arbitration apply equally to adjudication. However, the extent to which the rules of natural justice apply depends on the circumstances. [108] Several decisions of one of the earliest jurisdictions to implement statutory adjudication, that is the United Kingdom under its Housing Grants, Construction Regeneration Act of 1996, provide some helpful guidelines on this area of law. [109] In Balfour Beatty Construction Ltd v Lambeth London Borough Council [2002] EWHC 597, Humphrey Lloyd QC held that the principles of natural justice applied to adjudicators and adjudication but these should relate to matters which are either decisive or of considerable importance to the outcome and not peripheral or irrelevant. In other words, it is the test of materiality: Nevertheless, in my judgment, that which is applicable in arbitration is basically applicable to adjudication but, in determining whether a party has been treated fairly or in determining whether an adjudicator has acted impartially, it is very necessary to bear in mind that the point or issue which is to be brought to the attention of the parties must be one which is either decisive or of considerable potential importance to the outcome and not peripheral or irrelevant. It is now clear that the construction industry regards adjudication not simply as a staging post towards the final resolution of the dispute in arbitration or litigation but as having in itself considerable weight and impact that in practice goes beyond the legal requirement that the decision has for the time being to be observed. Lack of impartiality or of fairness in adjudication must be considered in that light. It has become all the more necessary that, within that rough nature of the process, decisions are still made in a basically fair manner so that the system itself continues to enjoy the confidence it now has apparently earned. The provisional nature of the decision also justifies ignoring non-material breaches. Such errors, if apparent (as they usually are), will be rectified in any negotiation and settlement based upon the decision. The consequence of material issues and points is that the dispute referred to adjudication will not have been resolved satisfactorily by any fundamental standard and the chances of it providing the basis for a settlement are much less and the chances of it proceeding to arbitration or litigation are much greater. However the time limits, the nature of the process and the ultimately non-binding nature of the decision, all mean that the standard required in practice is not that which is expected of an arbitrator. Adjudication is closer to arbitration than an expert determination but it is not the same. [emphasis added] [110] Next, Carillion Construction Ltd v Devonport Royal Dockyard Ltd [2005] EWCA 1358, [2006] BLR 15 where Chadwick LJ opined that it was not the task of the adjudicator to act as arbitrator or judge. According to His Lordship, the statutory scheme had subordinated the need to have the ‘right’ answer to the need to have an answer quickly, that- “The objective which underlies the 1996 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 the adjudicator.” [111] In Cantillon Limited v Urvasco Ltd [2008] EWHC 282, Akenhead J rejected the complaint that a failure by the adjudicator to allow one of the parties a reasonable opportunity to make submissions and adduce evidence in relation to the claim for prolongation costs amounted to a breach of natural justice. According to His Lordship, a breach of natural justice must first be established. But that is not enough to set aside an adjudication decision. The breach, if established, must be more than peripheral; it must not be irrelevant but be material in that it is either or of considerable importance to the outcome of the resolution of the dispute. [112] Whether the issue is decisive or of considerable potential importance, is peripheral or irrelevant is a question of degree which must be assessed by the judge. It is only if the adjudicator goes off on a frolic of his own, decide the case on a factual or legal basis which has not been argued or put forward by either side, without giving the parties an opportunity to comment or put in relevant evidence, if appropriate, that the breach may be said to be material rendering the decision reached liable to be set aside. [113] Similarly, in Primus Build Ltd v Pompey Centre Ltd [2009] EWHC 1487, it was held that any alleged breach of natural justice must be examined critically for materiality and significance to the decision actually made by the adjudicator. It must go to “the heart of the adjudicator’s decision”. [114] In my view, if the “frolic” of the adjudicator makes no difference to the outcome, the decision must be enforced – see also Herbosch-Kiere Marine Contractors Ltd v Dover Harbour Board [2012] EWHC 84; ABB Ltd v Bam Nuttall Ltd [2013] EWHC 1983; Roe Brickwork Ltd v Wates Construction Ltd [2013] All ER (D) 105; AECOM Design Build Ltd v Staptina Engineering Services Ltd [2017] EWHC 723. [115] In these appeals, the reference by the learned adjudicator to clause 36.6 did not have the same materiality or significance. Quite aside from the fact that the parties, especially the respondent was fully aware of the entire clause 36, it was also a matter of contractual construction which the adjudicator was entitled to decide. [116] It is thus, a relatively high threshold that must be crossed before the complaint is sustainable. [117] In Australia, the position is very much the same. The New South Wales Court of Appeal required that there should be substantial denial of natural justice to the same level as a “basic and essential requirement” which underpins the enforceability of an adjudication determination; that there must be materiality in the breach complained of – see Brodyn Pty Ltd t/as Time Cost and Quality v Davenport [2004] NSWCA 394; and Shellbridge Pty Ltd v Rider Hunt Sydney Pty Ltd [2005] NSWSC 1152. [118] In Shellbridge, Barrett J commented that “It cannot be intended that an adjudicator working to the tight statutory timetable will be as painstaking as a judge who has reserved judgment in a case involving the same claims under the same construction contract. The statutory intention is that the adjudicator is to work quickly and this may militate against the standards of thoroughness and detail generally expected in arbitration or litigation. There is the added factor that adjudicators are not necessarily legally qualified, and the parties not legally represented or may have prepared the documents themselves – see Watpac Constructions (NSW) Pty Ltd v Austin Corp Pty Ltd [2010] NSWSC 168, where McDougall J opined that “fairness is not abstract but practical … the concern of the law is to avoid practical injustice”. [119] In Edelbrand Pty Ltd v H M Australia Holdings Pty Ltd [2012] NSWCA 31, the complaint of procedural unfairness related to the lack of opportunity to make submissions on a case authority relied on by the adjudicator. The NSW Court of Appeal scrutinised the records and concluded that the adjudicator’s consideration of a case authority which was not cited by either party did not make any difference to the conclusion reached based on the evidence before him and so the complaint was rejected and the enforcement ordered. See discussions of this case in ABC Glass & Aluminium Pty Ltd v Nik Nominee Pty Ltd [2019] QSC 17 by the Queensland Supreme Court. [120] Singapore has followed that same approach generally adopted in arbitration jurisprudence with Judith Prakash J leading the way in SEF Construction Pte Ltd v Skoy Connected Pte Ltd [2009] SGHC 257, [2010] 1 SLR 733; followed by Vinodh Coomaraswamy J in Hauslab Design & Build Pte Ltd v Vinod Kumar Ramgopal Didwania [2016] SGHC 222, [2017] 3 SLR 103. [121] After examining the various jurisdictions on this thorny issue, Chow Kok Fong in his Security of Payments and Construction Adjudication [Third Edition, LexisNexis 2022, page 732] concluded that- “… the bar for challenging a tribunal’s decision on the ground of breach of natural justice is high. Again, drawing from the position in arbitration, the Courts are alive to attempts to disguise what is in substance ‘an appeal on the legal merits’ of an arbitrator’s (or in this case adjudicator’s) decision as a challenge on the grounds of procedural fairness. In Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd, the Court of Appeal accepted the submission that ‘an award should be read generously such that only meaningful breaches of natural justice that have actually caused prejudice are ultimately remedied. As succinctly stated in a leading arbitration text, ‘the issue is whether the arbitrator was denied the benefit of arguments or evidence that had a real as opposed to a fanciful chance of making a difference in his deliberations’. Furthermore, even in arbitration, it is considered that the concept of a party’s right to be heard should not be subject to the same rigours of the same concept as understood in administrative law. Arbitration has been rightly distinguished as being much less concerned with protecting the vulnerable against arbitrary governmental or quasi-governmental action as a dispute resolution process. It has been said that one of the objectives of international arbitration is for businesses to achieve ‘expeditious, economical and final determination’. While an adjudicator’s determination enjoys only temporary finality, the objectives of expedition and economy are perhaps even more deeply entrenched in the legislative intent behind the Singapore SOP Act.” [122] Again, the threshold is high. What then is the position in Malaysia? Here, I will similarly draw on the relevant jurisprudence in arbitration for this third question. In this regard are the two latest decisions of this Court on this same issue raised in arbitration – Pancaran Prima Sdn Bhd v Iswarabena Sdn Bhd & Another Appeal [2021] 1 MLJ 1 and Master Mulia Sdn Bhd v Sigur Rus Sdn Bhd [2020] 12 MLJ 198. [123] In Pancaran Prima Sdn Bhd, this Court dealt with a similar complaint of breach of natural justice by looking at the right of the arbitrator to draw from his own knowledge and expertise on any fact in issue which the arbitrator is acquainted with. Having done so, the Federal Court concluded that the arbitrator was entitled to draw from his own expertise and the allegation of breach of natural justice was rejected. In Master Mulia Sdn Bhd, the Federal Court affirmed the decision of the Court of Appeal which had set aside an arbitration award on the ground that there was a material breach of natural justice. A claim which would have been otherwise dismissed was instead allowed by the learned arbitrator who relied on a different causative aspect, that aspect or point being one which was drawn from the arbitrator’s own expertise but which he did not alert the parties or invite their comments before making his award. [124] Vernon FCJ writing the judgment of the Federal Court in Master Mulia Sdn Bhd examined the principles behind the UNCITRAL Model Law which underlay the Arbitration Act of 2005 [Act 646] and the approach adopted by several other jurisdictions when dealing with an application to set aside an arbitration award on the ground that there was a breach of natural justice. At paragraph 53, His Lordship set out the following guiding principles: [53] In the light of the above we think that the guiding principles on the exercise of residual discretion when an application for setting aside an award is grounded on breach of natural justice may be stated as follows:

first, the court must consider: (a) which rule of natural justice was breached; (b) how it was breached; and (c) in what way the breach was connected to the making of the award;

second, the court must consider the seriousness of the breach in the sense of whether the breach was material to the outcome of the arbitral proceeding;

third, if the breach is relatively immaterial or was not likely to have affected the outcome, discretion will be refused;

fourth, even if the court finds that there is a serious breach, if the fact of the breach would not have any real impact on the result and that the arbitral tribunal would not have reached a different conclusion the court may refuse to set aside the award;

fifth, where the breach is significant and might have affected the outcome, the award may be set aside;

sixth, in some instances, the significance of the breach may be so great that the setting aside of the award is practically automatic, regardless of the effect on the outcome of the award;

seventh, the discretion given the court was intended to confer a wide discretion dependent on the nature of the breach and its impact. Therefore, the materiality of the breach and the possible effect on the outcome are relevant factors for consideration by the court; and

eighth, whilst materiality and causative factors are necessary to be established, prejudice is not a pre-requisite or requirement to set aside an award for breach of the rules of natural justice. [54] Underlying these guiding principles is the policies and objectives of the New York Convention and the Model Law. As a matter of principle and policy, the courts will seek to support rather than frustrate or subvert the arbitration process. The role of courts in the arbitral regime in general is one of assistance supportive of the arbitral process and not one of interference with it. Bearing in mind the two primary objectives of the Model Law (respect for and preservation of party autonomy and ensuring procedural fairness), the courts do not review the merits of the arbitral tribunal’s decision. [125] I find these principles equally persuasive and applicable when dealing with applications to set aside adjudication decisions on the ground that there is a breach of natural justice. In any case, the English decision of Cantillon as discussed above was relied on and followed in Ranhill E & C Sdn Bhd v Tioxide (Malaysia) Sdn Bhd [2015] 1 LNS 1435 and Econpile

(M) Sdn Bhd v IRDK Ventures Sdn Bhd & Another Case [2016] 5 CLJ 882. The tests set out in Cantillon was acknowledged and supposedly followed by the Court of Appeal in the present appeals – see paragraph [37]. [126] However, I noticed that in holding that there was a breach of natural justice, the Court of Appeal merely looked at the matter of ‘pleadings’, that because clause 36.6 was not ‘pleaded’ in the payment claim, the learned adjudicator had gone on a frolic of his own by “relying on an un-pleaded clause 36.6”, that he had committed a material breach of the rules of natural justice by failing to notify or bring to the attention of the parties that he was relying on that clause. The Court of Appeal found that clause 36.6 was the “basis of his decision to allow the respondent’s claim”. [127] With respect, the Court of Appeal could not be more wrong not only for the reasons already discussed but because the learned adjudicator actually did not allow the appellant’s claim based on that clause. There was a whole lot more. Clause 36.6 was also not a material but a peripheral issue. It was neither decisive nor of considerable importance as it did not make any difference to the conclusion reached. [128] The appellant’s claim was allowed for this one simple reason as seen at paragraph 105 of the adjudication decision – “that the Claimant has proved on a balance of probabilities, and that the Respondent shall pay the cost of Independent Consultants which [sic] engaged by the Claimant in produced [sic] the relevant report as instructed by the Respondent’s consultants”. At paragraph 104, the adjudicator found cogent proof demolishing, so to speak, the “three essential grounds” raised by the respondent in opposing the claim – clause 36.5; no proof of any AI or EI or any relevant directions issued by the respondent’s consultants; and the absence of a certificate issued by the respondent and/or its consultants of the sum payable for this claim of professional fees. [129] The respondent had raised clause 36.5 as the correct and crucial provision but the learned adjudicator was of the considered opinion that “clause 36.6 of COC are [sic] is the one most applicable to the Claimant’s claim”. It is clear that the adjudicator did not say that this was the applicable provision or that it was the only applicable contractual term; he simply said that it was “most applicable”. That, in my understanding, means what it says but it does not mean that the clauses cited by the appellant are not applicable at all. It must not be overlooked that the appellant’s claim was one made post-termination; hence its reliance on clauses 55 and 56 and invocation of rights and remedies pursuant to those clauses whereas clause 36 arguably may arise sans termination. [130] In my view, it is the second ground that was material and made the difference to the conclusion reached. In response to the respondent’s defence as reflected in the payment and adjudication responses, that there were no instructions given, the appellant had led documentary evidence of instructions from the respondent or its consultants for the production of the report which underpins the claim for professional fees. [131] The learned adjudicator examined these various pieces of documentary evidence, namely the consulting engineer’s letter dated 26 August 2016 and the architect’s letter dated 9 December 2016. Both letters separately required the appellant to “mengemukakan laporan berkenaan bagaimana retakan yang telah berlaku dan tindakan yang sewajarnya akan diambil bagi membaiki retakan” and “menyediakan dokumentasi berikut … lapuran lengkap mengenai masalah integriti konkrit…” These two letters provided cogent proof of work done as per the respondent and/or its consultant’s instructions. [132] At paragraph 103, the learned adjudicator found that “based on the above instruction, the Claimant has done so accordingly by producing a relevant report to the respondent and respondent’s consultant…” The adjudicator further found at paragraph 104, that the independent consultant had “certified and endorsed that the building is safe and this would have meant that the Claimant has carried out the construction work are [sic] in accordance to the Contract”. [133] Quite apart from the fact that the adjudicators are masters of the facts found by them upon examination of evidence led by the parties, and despite the issue of validity of termination and differences of reports produced by the parties to be determined elsewhere, I have no reason to disagree with the adjudicator or doubt that these letters firmly prove the appellant’s claim for professional fees. The citing and reference to clause 36.6 is peripheral, almost a red herring. [134] Without this documentary evidence or letters emanating from the respondent and/or its consultants themselves, clause 36.6 will not take anyone anywhere. Clause 36.6 has no real bearing on the outcome of the claim as clauses 55 and 56 are sufficient to accommodate the claim. It is these letters which sealed the respondent’s fate and there is clearly no breach of any rule of natural justice. [135] Furthermore, the appellant and respondent are entirely familiar with their course of contractual works, more so having undergone no less than four earlier adjudication proceedings where more or less the same defences had been raised by the respondent. In each of those proceedings, the respondent’s defences had been rejected and the appellant’s payment or adjudication claims allowed. [136] Consequently, consistent with the principles in Cantillon, adopted in Ranhill E & C and Econpile and similar principles found in arbitration jurisprudence as enunciated in Master Mulia, I have no hesitation in answering this third question also in the negative. [137] The high threshold which the respondent necessarily had to meet in view of the intent of CIPAA, its operation and application, was never met at all by the respondent, be it on the facts or even on the assumption that the learned adjudicator had referred to clause 36.6 unilaterally. [138] Clause 36.6 which is part of clause 36 was drawn to the adjudicator’s attention by the respondent itself. Clause 36 has subclauses 36.1 to 36.6. It is artificial and totally impractical if not naïve to claim that the adjudicator cannot, with his inquisitorial powers under section 25, make his observations about some other subclauses of clause 36, including 36.6. The adjudicator is entitled to look at the whole of clause 36, and the rest of the Construction Contract. Such an examination is entirely permitted under the remit of View Esteem. The Court of Appeal had recognised the use of such powers in Milsonland Development Sdn Bhd v Macro Resources Sdn Bhd & Ors and Another Suit [2018] 1 LNS 2078 earlier acknowledged in WRP Asia Ltd v NS Bluescope Lysaght Malaysia Sdn Bhd [supra], and I agree to the proposition that adjudication proceedings involve inquisitorial inquiries and not adversarial process. The learned adjudicator was therefore not in breach of any rule of procedural fairness when he did not invite the parties, especially the respondent to comment on clause 36.6. [139] The way allegations and complaints of breach of natural justice are treated and addressed by the Courts in public law should not have the same foothold here in statutory adjudication dealing specifically with payment disputes in construction contracts, an entirely commercial arrangement. Other jurisdictions which have adopted statutory adjudication take the same approach, and our Courts should do the same. [140] In Discain Project Services Ltd v Opecprime Development Ltd [2000] BLR 402, it was recognised that for the statutory regime or system to work in practice, “some breaches of the rules of natural justice which have no demonstrable consequence are disregarded”. Clearly, the complaint of breach of natural justice by the respondent in the present appeals is of no demonstrable consequence and must be disregarded. [141] The position in Singapore under its Building and Construction Industry Security of Payments Act 2004 [SOP Act] is no different. Rules of natural justice “are not engraved on tablets of stone”; “everything depends on the subject-matter”; as held in the Singapore decision of Chip Hup Hup Kee Construction Pte Ltd v Ssangyong Engineering & Construction Co Ltd [2008] SGHC 159. For fair play to apply, there must be real flexibility. [142] The Singapore Court further added that “Justice, whether performed by a court, a tribunal or any quasi-judicial body, is a balancing exercise between thoroughness and timeliness. More formal settings, such as litigation through a court, would tend to emphasise the former. The adjudication process under the SOP Act instead chooses a quicker, but somewhat less thorough means of achieving justice. This is a general theme which pervades the SOP Act and in itself is not a ground for saying that natural justice has been denied”. CIPAA has the same refrain and this approach too must be adopted in these appeals. [143] Again, I refer to the earlier considerations that must be borne in mind - the purposive rule of interpretation, the particular industry that is under scrutiny, that is, the construction industry and the specific issue of payment claims, the familiarity of the parties with one another and the underlying Construction Contract, the fact that the parties had already undergone four previous adjudication proceedings and the defences raised by the respondent. [144] The learned adjudicator’s decision must be read as a whole and not cherry-picked by the respondent in the manner done. Had that been conducted as any reasonably circumstanced Court hearing an appeal would have, it would have readily come to light that the appellant’s claim for professional fees arose in the context of a terminated contract; that the monies are for work done under the Construction Contract. [145] The learned adjudicator was also perfectly entitled to reach the conclusions that he did, and it is obvious reading the adjudication decision that he had carefully and almost exhaustively evaluated the evidence led against the Construction Contract and applying the legal principles to the evidence before concluding that the appellant’s claim was proved. [146] Further, the learned adjudicator’s engagement of his inquisitorial powers was exercised adequately and commendably to reach the decision that the Courts must endeavour to support and uphold for its interim finality. So long as the adjudicator confined himself to the dispute that was referred to him under section 5, even if he decides it wrongly, he has not exceeded his jurisdiction and there is no breach of natural justice. The decision remains binding and enforceable and must be enforced – see Bouygues (UK) Ltd v Dahl-Jensen (UK) Ltd [2000] BLR 522, UDA Holdings Sdn Bhd [supra]; Ceylon Builders Sdn Bhd v Ultimate Pursuits Sdn Bhd & Another Appeal [2018] MLJU 1918. [147] It should only be in rare circumstances that an adjudication decision is set aside – see ACFM Engineering & Construction Sdn Bhd v Esstar Vision Sdn Bhd & Another Case [2015] MLJU 1951. The circumstances complained of by the respondent plainly do not warrant intervention by the Court and the Court of Appeal was plainly in error for intervening. Conclusion [148] All three questions of law are thus answered in the appellant’s favour. The appeals are thus allowed and the decisions of the Court of Appeal are set aside. Dated: 8 January 2024 Signed (MARY LIM THIAM SUAN) Federal Court Judge Malaysia Counsel/Solicitors For the appellant: Ong Yu Shin, Lim Wooi Ying & Lee Hooi Ying Messrs. The Chambers of Yu Shing Ong Unit 12A, Level 12, Menara KWSP Jalan Sultan Ahmad Shah 10050 Georgetown Pulau Pinang For the respondent: Mahinder Singh Dulku, Abdul Fareed bin Abdul Gafoor, Farah Nabilah binti Shaharuddin Messrs. Ezrilaw Firm 55-17-D, Menara Northam Jalan Sultan Ahmad Shah 10050 Georgetown