Concrete Empire Sdn Bhd v Turnpike Synergy Sdn Bhd (WA-24C-116-06/2022)

17.1 the Plaintiff has obtained the Panzana AD on 11.10.2021

17.2 as at todate the Panzana AD has not been paid yet by

17.3 it is not disputed that the Defendant is the principal to Panzana based on the facts of the matter

17.4 the Defendant had in its Affidavit in Support affirmed on 15.7.2022 in enclosure 3 stated that there were at 24.1.2022, at the material time, willing and able to make payment of the Adjudicated Sum under the Panzana AD to the Plaintiff herein

17.5 Panzana has obtained the Turnpike AD on 14.12.2021

17.6 the Defendant had filed a JM filed on 22.11.2021

17.7 the Plaintiff has made 2 demands on the Defendant pursuant to section 30 CIPAA i.e on 27.10.2021 and 18.2.2022 respectively

17.8 the Defendant has admitted to holding the sum of RM 1,356,122.70 as stakeholder

17.9 the Turnpike AD has not todate been set aside [18] This Court must first decide whether there are monies owed by the Defendant to Panzana at the time of the receipt of the Notices. This principle can be seen in the decision of CT Indah Construction Sdn Bhd v BHL Gemilang Sdn Bhd [2017] MLJU 2275 where Lee Swee Seng J (as His Lordship then was) held: “[26] However I must add a qualification to the mandatory use of the word “shall” in subsections (2) and (3) and it is that they are still subject to subsection (5) in that section 30 may only be invoked if money is due or payable by the principal to the Respondent in the Adjudication, BHL Builders at the time of the receipt of the request under subsection (1). [27] Thus if there is no money due then the law does not by section 30 create a separate independent obligation on the Defendant as the principal as Developer to BHL Builders as its Contractor, to pay the Claimant as the Subcontractor of the Project. [28] Thus the learned authors, Lam Wai Loon and Ivan Y. F. Loo, of Construction Adjudication in Malaysia (First Edition) Lexis Nexis did at page 417 caution and clarify as follows: “(e) Fifthly, and most importantly, there is money due or payable by the principal to the losing party at the time of its receipt of the written request for payment from the winning party. In this regard, the principal is only obligated to make payment to the extent of the sum due or payable by the principal to the losing party, or the adjudicated amount, which ever is lower? (emphasis added)” [19] As mentioned above in my grounds herein, from the chronology of events presented to this Court it has been proven to the satisfaction of this Court that there are monies owed by Defendant, as the principal, to Panzana at the date of the 2 Notices being received by the Defendant and that the Defendant has failed to accede to the Plaintiff’s request for the said payments to be made pursuant to section 30 CIPAA. [20] Thus, based on CT Indah Construction Sdn Bhd (supra), the principal i.e the Defendant herein is obligated to make payment of the sum due to the Plaintiff as the winning party under the Panzana AD as at the time of the 2 Notices there are monies due or payable by the principal/ Defendant to the losing party/Panzana. The fact that the Turnpike AD was not in existent at the time of the first Notice dated 27.10.2021 being issued is in my opinion irrelevant. My reasons for the same can be found herein my grounds below under the heading ‘Specific Legislation” and relates to the effect of section 30 CIPAA. Judicial Management [21] With regards the JM which was filed subsequently by the Defendant and which they claim makes the section 30 CIPAA claim under the Panzana AD as invalid as it is now contrary to sections 410 and 426 of the CA; my decision is as follows. [22] Section 410 of the Companies Act 2016 states: During the period beginning with the making of an application for a judicial management order and ending with the making of such an order or the dismissal of the application:

no resolution shall be passed or order made for the winding up of the company;

no steps shall be taken to enforce any charge on or security over the company's property or to repossess any goods in the company's possession under any hire purchase agreement, chattels leasing agreement or retention of title agreement, except with leave of the Court and subject to such terms as the Court may impose; and

no other proceedings and no execution or other legal process shall be commenced or continued and no distress may be levied against the company or its property except with leave of the Court and subject to such terms as the Court may impose [23] Section 426 of the Companies Act 2016 provides:

Any transfer, mortgage, delivery of goods, payment, execution or other act relating to property made or done by or against a company which is unable to pay its debts as the debts become due, from the company's own money in favour of any creditor or any person in trust of any creditor with the intention to give such creditor a preference over other creditors shall be void in the event of the company being placed under judicial management on an application for a judicial management order presented within six months from the date of making, taking, paying or suffering the transfer, mortgage, delivery of goods, payment, execution and every such act.

Any transfer or assignment by a company of all its property to trustees for the benefit of all its creditors shall be void.

This section shall not affect the rights of any person making title in good faith and for valuable consideration through or under a creditor of the company placed under the judicial management [24] The above sections would on the face of the same be in direct contradiction to the provision in Section 30 of CIPAA which reads:

If a party against whom an adjudication decision was made fails to make payment of the adjudicated amount, the party who obtained the adjudication decision in his favour may make a written request for payment of the adjudicated amount direct from the principal of the party against whom the adjudication decision is made.

Upon receipt of the written request under subsection (1), the principal shall serve a notice in writing on the party against whom the adjudication decision was made to show proof of payment and to state that direct payment would be made after the expiry of ten working days of the service of the notice.

in the absence of proof of payment requested under subsection (2), the principal shall pay the adjudicated amount to the party who obtained the adjudication decision in his favour.

The principal may recover the amount paid under subsection

as a debt or set off the same from any money due or payable by the principal to the party against whom the adjudication decision was made.

This section shall only be invoked if money is due or payable by the principal to the party against whom the adjudication decision was made at the time of the receipt of the request under subsection (1). [25] Applying the maxim of generalibus specialia derogant , I hold that sections 410 and 426 of the CA must be read subject to section 30 CIPAA as the former sections in the Companies Act 2016 are general sections on the powers of the Court at the hearing of the JM as compared to section 30 CIPAA which is a specific section on the powers of this Court in a construction industry claim under CIPAA, which is itself an Act which deals with specifically construction industry claims only, to grant the party who obtained an adjudication decision under CIPAA in its favour, being the Plaintiff herein, to make a written request for payment of the adjudicated amount direct from the principal of the party, i.e the Defendant, against whom the Panzana AD is made i.e Panzana. [26] The application of this maxim can be found in Language Distributor (M) Sdn Bhd v Tan Hor Teng [1995] 3 CLJ 520 where Goal Sri Ram CJA (as he then was) stated: "......the rule of construction expressed in the maxim generalibus specialia derogant. Where there are two provisions of written law, one general and the other specific, then, whether or not these two provisions are to be found in the same or different statutes, the special or specific provision excludes the operation of the general provision" Specific Legislation [27] It must be borne in mind that CIPAA was enacted for the very specific purpose of enabling the construction industry to realise cashflow issues affecting contractors who had difficulty to resolve payment disputes and that these disputes have to be quickly resolved in a cost-effective manner to ensure the smooth execution of the construction projects. [28] This is consonant with the main intent of CIPAA which has been held in Martego Sdn Bhd v Arkitek Meor & Chew Sdn Bhd and Anor appeal [2020] 6 MLJ 224 where it was held by the Federal Court amongst others that the interpretation expounded by the majority of the Court of Appeal in that case was consistent with the purpose and structure of the adjudication process outlined in the CIPAA 2012 and that it was clear from the Preamble, the Explanatory Notes to the Bill and the speech of the Deputy Minister when tabling the CIPAA Bill that the primary objective of the CIPAA 2012 was to alleviate cash flow issues by providing an effective and economical mechanism. [29] I would also like to quote and apply CT Indah Construction Sdn Bhd v BHL Gemilang Sdn Bhd [2020] 1 CLJ 75 to support my decision on the effect of section 30 CIPAA where the Court of Appeal held: “[14] In the instant case, the liability of the respondent to make payment is imposed by statute, ie, by s. 30(3) of CIPAA. Thus, payment made by the respondent to the appellant would not be from the assets of BHL Builders, but because the adjudicated sum is paid by the respondent, it will be a debt due from BHL Builders to the respondent (once the respondent makes direct payment to the appellant) which the respondent will have to recover from BHL Builders pursuant to sub-s. 30(4). [15] We agree with learned counsel for the appellant that a legal obligation to pay may arise either by statute (as in the present case) or by contract. In fact, an obligation imposed by statute, in this case by sub-s. 30(3) of CIPAA, is stronger because in the absence of proof of payment by BHL Builders as requested by the respondent under sub-s. (2), it becomes mandatory for the respondent as the principal to pay the adjudicated sum of RM9,065,335.67 to the appellant. It is a requirement of law which the respondent has no discretion not to comply with it. (emphasis mine) [16] We are also in agreement with learned counsel for the appellant that s. 30 of CIPAA creates an independent statutory obligation on the part of the respondent, as a principal in its own right, to pay the appellant and that this is a separate obligation to pay imposed by statute which exists in parallel with BHL Builder's obligation as the main contractor to pay the appellant under the adjudication decision.” [30] Following from the above, I hold that section 30 CIPAA is thus a separate and distinct statutory obligation imposed on the principal to make payment under an adjudication decision on behalf of the losing party in the Adjudication proceedings to the Plaintiff herein as the winning party and must take precedence over the general sections 410 and 426 of the CA in the matter before this Court. [31] For the record, after this court had heard the respective counsels submit on the matter on 8.8.2023 and fixed the same for decision on 15.9.2023, Panzana’s solicitors, Messrs Hakem Arabi & Associates (Panzana’s Solicitors) had attempted to make further submissions via its letter dated 11.9.2023, which is just a few days before this Court was about to deliver its decision on the matter. [32] I had then instructed the learned Senior Assistant Registrar to contact the Plaintiff’s solicitors for its comments on the same, after which a letter dated 12.9.2023 was then received by the court from the Plaintiff’s solicitors, Messrs Macy Chong & Associates (Plaintiff’s Solicitors), who had vehemently objected to the said further submissions on inter alia the grounds that Panzana was trying to ‘steal a march’ and an afterthought. [33] After giving due consideration to the said Panzana’s Solicitors letter of 11.9.2023 and the Plaintiff’s Solicitors letter dated 12.9.2023 respectively mentioned above, this Court had decided not to entertain any further submissions in any form on the matter as the parties had been given ample opportunity to submit on the matter orally on 8.8.2023 as well as to submit their Written Submissions earlier on which the parties counsels had done so as directed by this Court. [34] It would not be fair to the parties and to this Court’s precious time to reopen submissions on the same as it would amount to allowing the parties to make its submissions by instalments which this Court abhors and finds the same as being improper. [35] This Court must surely prevent such an abuse. There would be no end to the litigation process if the Court were, in such circumstances, to allow such further submissions. [36] I was on the eve of delivering my decision informed that 2 other letters had arrived, one from Panzana’s Solicitors dated 14.9.2023 inter alia informing this court that a JM Order had been granted by the Shah Alam High Court on 23.8.2023 and thereafter making further submissions on the same points raised in their earlier letter dated 11.9.2023. This was followed up by the Plaintiff’s Solicitors letter of even date objecting to the contents of the said Panzana’s Solicitors dated 14.9.2023. [37] After perusing both the said letters this Court holds that there is no change to my decision that the JM and now the JM Order will have no effect on section 30 CIPAA as it is a separate and distinct statutory obligation imposed on the principal to make payment under an adjudication decision and should thus take precedence over the general sections 410 and 426 of the CA in the matter before this Court on the reasons I have already stated above. [38] That being the case I hereby allow the Plaintiff’s claim as per prayers 1, 2.1 to 2.3 and 3 of enclosure 1. Dated: 15th day of September 2023 sgd. NADZARIN WOK NORDIN HIGH COURT JUDGE CONSTRUCTION COURT 1 COUNSEL FOR THE PLAINTIFF: Mohd Rezan Ezra bin Muhammad, Nandakumar a/l S. Haridas and Chong Mei Zhi (Messrs Macy Chong & Associates] COUNSEL FOR THE DEFENDANT: Vatsala Ratnasabapathy and Constance C.J Pau [Messrs Zain & Co.] COUNSEL FOR PANZANA: Ganesh a/l Magenthiran and Suronmani a/p Krishnan [Messrs Hakem Arabi & Associates]