Charter Built Construction Sdn Bhd v Amalan Setar (M) Sdn Bhd (WA-24C-136-09/2023)

5.1 By way of a Letter of Award dated 10.1.2018 that was executed by parties on 2.2.2018 (“LA”) 2, ASSB appointed CBC as the Contractor for the project known as: PROPOSED CONSTRUCTION AND COMPLETION OF PHASE 1A CONSIST OF 116 UNIT A) 56 UNIT RUMAH TERES 2 TINGKAT 18X60(RT7) DI ATAS LOT-LOT PT 15167-15194 B) 10 UNIT RUMAH TERES 2 TINGKAT 18X64(RT7A) DI ATAS LOT-LOT PT 15157-15166 C) 50 UNIT RUMAH TERES 2 TINGKAT 18X70(RT7B) DI ATAS LOT-LOT PT 15107-15156 D) 2 UNIT OF TNB SUBSTATION DI ATAS MUKIM BANDAR SERENDAH, DAERAH HULU SELANGOR, MAJLIS DAERAH HULU SELANGOR, SELANGOR DARUL EHSAN UNTUK TETUAN AMALAN SETAR (M) SDN BHD (“Project”)

5.2 This Project is part of a township development known as “Alamanda Parklands” in Rawang consisting of many different phases. Disputes have arisen in respect of 2 phases – Phase 1A (subject matter of this suit) and Phase 1B;

5.3 According to para 4.1 of the LA3, the Project was supposed to be completed by 15.3.2019; S/N tLaTmyzVl0mVj6dw/nit8w 7 5.4 There were 5 extensions of time (“EOT”) granted, and the extended completion date pursuant to the 5th and final EOT (“Impugned 5th EOT”) was 3.11.2019. ASSB takes the position that the Impugned 5th EOT was issued in bad faith and is thus invalid, whilst CBC takes the position that it was validly issued;

5.5 The Certificate of Practical Completion4 (“CPC”) was issued on 4.12.2019 certifying that CBC’s works were practically completed on 4.12.2019;

5.6 The Defects Liability Period (“DLP”) commenced on 5.12.2019. Under para 13.1 of the LA5, the DLP was 24 months and ought to have ended on 4.12.2021. However, ASSB takes the position that due to the Covid-19 pandemic, the DLP was extended by 167 days and, therefore, ought to have ended on 20.5.2022. CBC takes the position that there was no extension of the DLP and it ended on 4.12.2019;

5.7 When the LA was executed, both parties contemplated that the Main Contract Standard Form of Agreement and Conditions of PAM Contract 2006 (With Quantities) (“PAM Contract”) would be entered into and executed. Para 1.1 of the LA 6 provides that the conditions of the contract shall be based on the PAM

5.8 However, parties never executed the PAM Contract. CBC proceeded with works notwithstanding that the PAM Contract was not executed; S/N tLaTmyzVl0mVj6dw/nit8w

5.9 As such, ASSB takes the position that the LA is the only binding contract between the parties and its terms are to be relied upon where expressly provided for. Terms of the PAM Contract are not binding and are only relied upon for matters not covered by the LA; and

5.10 CBC, however, takes the position that the PAM Contract is not merely a guideline but it constitutes binding conditions of contract between parties. [6] On 9.2.2023, CBC issued a Payment Claim 9 (“PC”) to ASSB pursuant to CIPAA claiming the sum of RM486,618.44 comprising:

6.1 RM32,391.89, being the amount certified in Interim Certificate

6.2 RM67,353.58, being the amount certified in Interim Certificate No. 20; and 6.3 RM386,972.97, being the 2nd moiety of retention sum. [7] ASSB exercised its right under s 6(4) of CIPAA not to submit a Payment Response and was, therefore, deemed to have disputed the entire PC. [8] On 2.3.2023, CBC initiated adjudication proceedings vide its Notice of Adjudication. [9] On 26.5.2023, ASSB filed an Adjudication Response(“AR”) taking the position that the alleged outstanding amount of RM486,618.44 is S/N tLaTmyzVl0mVj6dw/nit8w subject to further deduction and / or set-off by ASSB’s counterclaim, as follows:

9.1 LAD of:

RM155,000.00; [calculated based on 31 days of delay from 4.11.2019 to 4.12.2019 at RM5,000.00 / day – if the Impugned 5th EOT is found to be valid]; or

(ii) RM405,000.00; [calculated based on 81 days of delay from 15.9.2019 – 4.12.2019 at RM5,000.00 / day – if the Impugned 5th EOT is found to be invalid];

9.2 Alternatively, unliquidated damages in lieu of LAD of:

RM5,126.16; [calculated based on 31 days of delay from 4.11.2019 to 4.12.2019 – [(1 guard x RM6.50 / hour x 24 hours x 31 days) + 6% SST] – if the Impugned 5th EOT is found to be valid]; or

(ii) RM13,394.16; [calculated based on 81 days from 15.9.2019 – 4.12.2019 – if the Impugned 5th EOT is found to be invalid];

(iii) RM59,135.09, being the amount incurred by ASSB in employing 3rd party contractors to carry out the necessary works which CBC allegedly failed, refused and / or neglected to carry out, including RM10,000.00 compensation that ASSB had to pay a 3rd party following an incident that occurred on 3.2.2020 (“Incident”), where a gate pillar collapsed due to CBC’s S/N tLaTmyzVl0mVj6dw/nit8w non-compliance with the contract and / or negligence and a child was badly injured (“Rectification Costs / Compensation”); and

9.3 General damages (to be assessed) for loss of reputation arising from the Incident. [10] On 8.6.2023, CBC submitted its Adjudication Reply. [11] The AD14 was delivered on 24.7.2023. The Adjudicator essentially decided as follows:

11.1 The Adjudicator allowed CBC’s claim and awarded:

RM486,618.44 for works done pursuant to the LA;

(ii) RM43,236.67 as interest; and

(iii) RM48,659.41 as costs; (“Adjudicated Amount”)

11.2 The Adjudicator ordered that the Adjudicated Amount be paid by 7.8.2023;

11.3 The Adjudicator did not allow ASSB’s counterclaim for LAD amounting to RM155,000.00 or RM405,000.00, or the alternative counterclaim for unliquidated damages in lieu of LAD of RM5,126.16 or RM13,394.16;

11.4 The Adjudicator did not allow ASSB’s claim of RM59,135.09 for Rectification Costs / Compensation. S/N tLaTmyzVl0mVj6dw/nit8w Respective Parties Case & Courts Findings Alleged Pre Mature Claim [12] ASSB had submitted that the Adjudicator had no jurisdiction to adjudicate CBC’s claim under CIPAA as the adjudication was initiated before the accrual of CBC’s cause of action i.e that it was pre maturely initiated. [13] It was thus argued amongst others that CBC is not an ‘unpaid party’ within the meaning of section 4 CIPAA so as to be entitled to issue a Payment Claim (PC) and/or initiate an adjudication as ASSB claims that the Defect Liability Period (DLP) should only have ended on 20.5.2022 instead of 4.12.2021 as the DLP was said to be extended by 167 days due to the Covid 19 pandemic based on the Architect’s Instruction (Architect’s Instructions) via email of 25.1.2022 which they claim was allegedly consented to by the parties and sanctioned by the Architect. [14] CBC had in turn argued that the said Architect’s Instructions was never copied to CBC and they had not agreed or consented to the extension. [15] In the AD, the Adjudicator had accepted CBC’s contention that the DLP was extended by 167 days to 20.5.2022 and that the extension was only applicable to developers and purchasers but does not apply to the Claimant and the Respondent in the Adjudication Proceedings. With respect this is consonant with section 36 of the Temporary Measures For Reducing the Impact of Coronavirus disease (Covid S/N tLaTmyzVl0mVj6dw/nit8w 19) Act 2020 under Part XI which only applies to the Defect Liability Period under the Housing Development (Control and Licensing) Act 1966. [16] In any event, based on the said ground in the AD, I hold that the Adjudicator had indeed made a finding of fact and law. Any argument by ASSB which goes to the merits of the AD by the Adjudicator cannot be challenged under section 15 CIPAA. It is also trite that any application under section 15 CIPAA is not an appeal. [17] I would also adopt and quote BM City Realty & Construction Sdn Bhd v MerGer Insight (M) Sdn Bhd & anor case [2016] 1 LNS 1096 where the Court therein had held: “[62] I agree with learned counsel for MISB that even if there was a failure to take into account of payment made to the NSCs, it is merely an error of findings of facts/law. Such an error does not require the Adjudication Decision to be set aside. There will not be a denial of natural justice if the Adjudicator had addressed all the right issues even in the wrong way. The adjudicator's decision will nevertheless be temporary binding. It is only when the adjudicator has answered the wrong issues that his decision will be a nullity. See Bouygues (UK) Ltd v. Dahl-Jensen (UK) Ltd [2001] 1 All ER (Comm) 1041; Bina Puri Construction Sdn Bhd v. Hing Nyit Enterprise Sdn Bhd [2015] 8 CLJ 728.” Certificate of Making Good Defects S/N tLaTmyzVl0mVj6dw/nit8w [18] I have also observed that ASSB had alleged that they were outstanding defects and issued a Certificate of Making Good Defects (“CMGD”) on 17.2.2023 and that the CMGD was allegedly validly issued but CBC had failed to attend to such defects. It was contended that ASSB had only completed the defect rectification works on 127.2.2023 i.e the date when the Architect had issued the CMGD. [19] On this the Adjudicator had after perusing the documents tendered by CBC in its Adjudication Response exercised his powers, which I hold he is entitled to do so, under section 25(m) of CIPAA which is the Adjudicators power to 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. In this respect the Adjudicator had reviewed and revised the CMGD issued to 5.12.2021 as he had found that none of the alleged defects occurred within the DLP and that the CMGD was issued to stifle ASSB’s claim when the DLP had lapsed since 4.12.2021. [20] With respect the arguments thus raised on the validity of the CMGD is again a question of fact wherein a finding of fact was made by the Adjudicator, which this Court should for the purpose of section 15 CIPAA, not disturb. Final Certificate [21] On the issue of the Final Certificate (“FC”) which ASSB claims is pre mature, ASSB contends that it is evident that CBC is claiming for S/N tLaTmyzVl0mVj6dw/nit8w sums allegedly due and owing under the FC and refers to the Adjudication Claim on this which states:

21.1 Based on the CPC issued on 4.12.2019, the DLP ended on 4.12.2021. Since there were purportedly no outstanding defects raised by ASSB during the DLP, the CMGD should have been issued on 5.12.2021;

21.2 The FC should have been issued on or before 2.1.2022;

21.3 Pursuant clause 12 of the LOA, the POHC shall be 45 days from the date of certificate; and

21.4 Therefore, the due date for payment of the amount due under the FC ought to be on 16.2.2022. [22] ASSB also submits inter alia that:

22.1 it is wrong to say that the FC should have been issued by 2.1.2022 as the DLP was extended by 167 days;

22.2 there were outstanding defects recorded as late as 26.9.2022, i.e after the alleged expiry of the extended DLP; and

22.3

decide or declare on any matter notwithstanding no certificate has been issued in respect of the matter [24] Accordingly, I do hold that this is also a matter within the powers of the Adjudicator based on the facts before him and of which under section 25(m) and (n) of CIPAA he has the power to exercise under the said section 25(m) and (n) of CIPAA. [25] I therefore hold that the Adjudicator had jurisdiction to exercise his powers with regards determining the date of the FC and thus I find that ASSB’s contention on this issue is therefore misconceived. Stay of Adjudication Decision [26] I have further, based partly on my grounds above with regards OS 188 found that there are no clear errors in the AD, and henceforth find no special or exceptional circumstances to grant a stay of the AD based on the grounds in OS 141. S/N tLaTmyzVl0mVj6dw/nit8w [27] In coming to my decision, I had also considered and do hold that the said contentions, claims and allegations raised in OS 141, which I have detailed below, are in my view, if any, not serious or grave errors for this Court to grant a stay of the AD and I hold that the said issues are to be properly decided in the Arbitration Proceedings. The alleged issues or errors, if any, are all issues of fact or law and therefore once again the challenge to the decision of the Adjudicator on these points goes to the merits of the decision and should or could be corrected in the said Arbitration Proceedings after taking into account the 9 alleged clear and unequivocal grounds in OS 141 being:

27.1 Effective date of SFA;

27.2 Duration of DLP;

27.3 Revision of CMGD date;

27.4 Date the FC should have been issued;

27.5 Finding that CBC’s CIPAA claim is not premature;

27.6 CBC’s actual completion date;

27.7 Validity of the Impugned 5th EOT;

27.8 ASSB’s claim on LAD or unliquidated damages in lieu of LAD; and 27.9 ASSB’s claim for Rectification Costs / Compensation. [28] For the record, in this respect I have also not found that the justice of the case herein justifies any stay being granted. I am of course in this respect, reminded that CIPAA was to ensure quick payment being made in a construction dispute, see Leap Modulation Sdn Bhd v PCP Construction Sdn Bhd And Another Appeal [2018] MLJU 772. S/N tLaTmyzVl0mVj6dw/nit8w Enforcement of Adjudication Decision [29] I do hold that CBC is at the end of the day, entitled to enforce its AD as the sums in the AD have yet to be paid and there are now no prohibitions before me to grant the said order prayed for.

[30] Following from all of the above, I hold that ASSB’s challenge to the AD is nothing more than a re-ventilation of its defence in the Adjudication Proceedings. At the sake of repetition, I hold that any issues on the findings can and should be made in the Arbitration Proceedings. [31] I therefore dismiss OS 188 with costs and grant Order In Terms for prayers 1, 2, 3 and 4 in enclosure 1 of OS 136. [32] I have also held that there are no grounds for a Stay and hereby also dismiss OS 141 with costs. Dated: 19th day of February 2024 sgd. NADZARIN WOK NORDIN HIGH COURT JUDGE CONSTRUCTION COURT 1 S/N tLaTmyzVl0mVj6dw/nit8w COUNSEL FOR THE APPLLICANT(OS136)/DEFENDANT(OS141& OS188): Chan Keng Hoe, Pung Kian Bang and Nurjannah Ummaira Selamat (chambering) (Messrs Chong + Kheng Hoe] COUNSEL FOR THE RESPONDENT(OS136)/PLAINTIFF(OS141& OS188): Aizurra Mirsya binti Mohd Aminudin and Bong Jun Ting (Messrs Cheah Teh & Su] S/N tLaTmyzVl0mVj6dw/nit8w