Schedule
Schedule 6 AMOUNT CLAIMED 2,924,330.37” [27] Further, the value of additional works which were done on top of the original contract after re-measurement based on As-Bulit Drawings claimed as of 5.5.2020 was described as the “said Additional Re-measurement Works” in the Adjudication Claim. The relevant paragraphs in the Adjudication Claim are re-produced below for ease of reference: “13. On top of the scope of sub-contract works demonstrated in the said Contract, the Claimant was requested by the Respondent to carry out additional re-measurement works to the said Contract because there was many unexpected differences between the Tender/Shop drawings and the As-Built Drawings, both drawn and approved by the Respondent itself ("the said Additional Re-Measurement Works"). … 15. At all the material times, it is undisputable that the Claimant had duly completed the said Sub-Contract Works, the said Additional Re-Measurement Works and the said Variation Works for the said Project following the said Contract, directions and drawings given by the Respondent. This is because the subject matter of the said Contract, the KTCC Mall has been completed and has been in operation since January 2020. This can be seen in KTCC MALL's official website at https://ktccmall.com.my/blog-nosidebar.php. Also, there are plenty of Youtube videos could demonstrate the same. 16. The Claimant’s total and final actual monetary value of works done for the said Sub-Contract Works, the said Additional Re-Measurement Works and the said Variation Works amounts to RM 7,684,781.26. To ease the Learned Adjudicator’s reference, a breakdown table for the calculation of RM 7,684,781.26 is reproduced as follows:- …”. [28] In the AD, the Adjudicator analysed “Issue 05 - The quantum of work done of the IPC No. 11 dated 27.08.2020” and found as follows: “3.6.1 After having reviewed and considered all the submissions, I am persuaded that the quantum of IPC No. 11 dated 27.08.2020 which issued by the Respondent in response to the Claimant’s progress claim submitted on 05.05.2020; and no payment has been made to the Claimant so far for the IPC No. 11 can be identified as two main issues need to be reviewed in this matter. Therefore, it is essential to review and determine the quantum of IPC No. 11 dated 27.08.2020. 3.6.2 Based on the submissions, I found that some air condition (AHU) and smoke spill system related works done as claimed in Claimant's submissions but have not been certified in the IPC No. 11 dated 27.08.2020. It should be noted that I found those works were indicated in the as-built drawings as submitted. There were some discrepancies found in the submissions for the smoke spill system related works at 4th floor and 5th floor, therefore, I issued a direction on 26.9.2022 to both parties to provide submission on the issue. Both parties provided its submissions accordingly. 3.6.3 The Claimant submitted that the discrepancies found in earlier submissions were typing errors on the level number which the 5th floor (L5) smoke spill (fresh air) works should be amended to 4th floor (L4) smoke spill (fresh air) works as shown in the drawings. However, the Respondent submitted that the 4th floor (L4) smoke spill system works have been omitted as variation and 5th floor (L5) smoke fill system works are not part of the Construction Contract, therefore it should not be considered in this matter. 3.6.4 After having reviewed and considered all submissions, I found that the Respondent’s submissions have failed to prove its argument that the 4th floor (L4) smoke spill system related works have been omitted and 5th floor (L5) smoke spill system related works were not part of Construction Contract - Purchase Order No. 004147 as no substantiations submitted to prove and/or validate those respective works were required to be omitted and/or works under another separate contract as disputed. In contrast, the Claimant has submitted as-built drawings to prove those works had been carried out. 3.6.5 However, based on submissions, I found that there are some works need to be omitted but have not been captured in the IPC No. 11 dated 27.08.2020. Therefore, it is fair to determine the extra omission works which can be identified as the ventilation (exhaust) related works. 3.6.6 Therefore, after having reviewed and considered all submissions, with the nature and characteristic of a CIPAA adjudication decision where it is of interim finality for the intention of easing the cash flow of the parties. I, pursuant to sections 25(m) of CIPAA, determined that the IPC No. 11 dated 27.08.2020 shall be adjusted accordingly and the ADJUSTED CONTRACT SUM shall be amounting to total RM6,358,355.03 as per breakdown shown below:- Item Description Total Adjusted Contract Sum (RM) Certified % Revised Work Done Amount (RM) Remarks … … … … … … 4 Variation Works 3 (As per IPC No. 11 dated 27.08.2020) (1,053,558.55) 100% (1,053,558.55) After having considered and reviewed all submissions, I determine the variations works 3 as recorded in the IPC No. 11 dated 27.08.2020 have been omitted. I certified 100% for this matter. 5 Variation Works 4 (Addition after having considered and reviewed all submissions in this matter) – See attached Appendix A 1,198,007.20 100% 1,198,007.20 After having considered an reviewed all submissions, I determined the variations works 4 have been completed but have not been included in IPC No. 11 dated 27.08.2020. I certified 100% for this matter. … … … … … …” (emphasis added). [29] Based on the Payment Claim, the total adjusted contract sum includes the sum of RM2,399,405.95 as the “Total Variation of Contract Sum as of 5.5.2020” or in other words, the value of variation works done for the Project. [30] In the course of the hearing, Eakonmech’s counsel agreed that the Tender/Shop Drawings and the As-Built Drawings, including the As-Built Drawings for the L4 and L5 “Smoke Spill & Pressurization System”, were submitted by Maple Steel as the Supporting Documents in Schedule 2 in the Payment Claim and Schedule 4 in the Adjudication Claim and Adjudication Reply (see encls. 23 and 29 and see too, paragraph 26(ii) of the Adjudication Claim). [31] Therefore, the L4 and L5 Smoke Spill Systems related works are part of Item 1(b) in the Payment Claim under “Total Variation of Contract Sum as of 5.5.2020” amounting to RM2,399,405.95, rather than Item 1(a) which makes reference to PO No. 004147, and even though these claims were not originally referred to as “Variation Works 4” and “Variation Works 5” by Maple Steel. [32] In paragraph 3.6.4 of the AD, the Adjudicator made a finding of fact and in law that Eakonmech failed to prove that the L4 Smoke Spill System related works have been omitted and the L5 Smoke Spill System related works are not part of PO No. 004147. The Adjudicator was satisfied, based on the As-Built Drawings, that Maple Steel has proven that the L4 Smoke Spill System related works have been completed (see “Variation Works 4” as the term which was used by the Adjudicator in Tabulation No. 3.6.6) and the L5 Smoke Spill System related works were omitted (see “Variation Works 5”as the term which was used by the Adjudicator in Tabulation No. 3.6.6). [33] Just because the Adjudicator had named the variation works done for the L4 Smoke Spill System related works as “Variation Works 4” and the variation works omitted for the L5 Smoke Spill System related works as “Variation Works 5” is not a valid reason to set aside the AD on the ground of absence of core jurisdiction. 2nd Ground: Whether the Adjudicator acted in excess of his jurisdiction when he made a determination of the Sub-Contract value and retention sum [34] The High Court in Terminal Perintis (supra) also held at paragraph 74 of the judgment that “In a case of contingent jurisdiction, it would be a case where for there to be jurisdiction, there must be further compliance with the requirements of the Act as in that the dispute must be one falling within the matters raised in the Payment Claim and the Payment Response as provided for under section 27(1) CIPAA. In that example the word “jurisdiction” is used in the sense of the scope of the dispute that is before the Adjudicator for decision. ….”. [35] Eakonmech contended that the Adjudicator had exceeded his jurisdiction when he had made a determination of the “Adjusted Contract Sum” at paragraph 3.6.6 of the AD and this had a knock-on effect on paragraphs 3.6.7 and 3.6.8 of the AD where the Adjudicator determined as follows: “3.6.7 Therefore, pursuant to sections 25(m) of CIPAA, I determined that the revised Total Net Amount (after deducting the 5% Retention Sum and previous IPC No. 1 to 10) of the Interim Payment Certificate (IPC) No. 11 shall be adjusted accordingly to the amount of RM1,610,308.15 for the work done as shown in tabulation below:- Tabulation No. 3.6.7 Item Description Total Amount (RM) 1 TOTAL REVISED WORK DONE OF IPC NO. 11 6,358,355.03 2 LESS 5% RETENTION SUM FROM ADJUSTED CONTRACT SUM (317,917.75) 3 LESS PAYMENT CERTIFICATE NO. 1 - 10 (4,430,129.13) REVISED NET AMOUNT OF IPC NO. 11 1,610,308.15 3.6.8 Therefore, I further determined that the revised total outstanding amount payable to the Claimant based on revised total work-done and 5% retention sum of IPC 11 (after deducting the 5% Retention Sum and Actual Payment Received to-date) shall be adjusted accordingly to the amount of RM1,541,598.65 as shown in tabulation below: Tabulation No. 3.6.8 Item Description Total Amount (RM) 1 TOTAL REVISED WORK DONE OF IPC NO. 11 6,358,355.03 2 LESS 5% RETENTION SUM FROM ADJUSTED CONTRACT SUM (317,917.75) 3 LESS PAYMENT RECEIVED FROM THE RESPONDENT (4,498,838.63) REVISED OUTSTANDING AMOUNT DUE 1,541,598.65” [36] Clause 11 of the TCS on “RETENTION” states that “All monthly progress payment made to the sub-contractor shall be subject to a retention sum equivalent to 10% of total work done. Upon handling over, a 5% of this retention shall be released. A further 5% shall be released 27 months from the CCC.”. [37] Eakonmech asserted that the retention sum was not part of Maple Steel’s claims as per the Payment Claim. [38] However, the “Particulars of Claim” in the Payment Claim clearly shows that, in calculating its entire claim for purposes of the adjudication proceedings, Maple Steel had factored in the deduction for retention sum (see too, paragraph 23 of the Adjudication Claim) as the Defects Liability Period has not expired at the time when the Payment Claim was submitted. [39] With regards to the adjustment of the value of works completed by Maple Steel, pursuant to s 25(m) CIPAA, the Adjudicator is entitled to review and revise any certificate issued pursuant to a construction work contract or valuation of the parties (see Bina Puri Construction Sdn Bhd v Hing Nyit Enterprise Sdn Bhd [2015] 4 AMR 565, Puncak Niaga Construction Sdn Bhd v Mersing Construction & Engineering Sdn Bhd and other cases [2022] 1 AMR 249 and MRCB Builders Sdn Bhd v Pembinaan Mitrajaya Sdn Bhd and another case [2023] MLJU 52). [40] Therefore, I find that Eakonmech has not established the 2nd Ground in the Setting Aside Application. 3rd Ground: Whether there is a denial of natural justice due to all or any of the following reasons: (a) By rewriting the terms of the TCS [41] In Hong Xin Construction Sdn Bhd v Rebana Maju Sdn Bhd [2024] MLJU 1907, this Court said: “[55] It is well-accepted that natural justice in the context of s 15(b) CIPAA refers to the second pillar of natural justice that the parties must be given adequate notice and opportunity to be heard. Basically, the line of enquiry which is undertaken by the courts in determining whether there is a denial of natural justice is to consider the manner in which the adjudicator conducted the hearing and whether he has accorded procedural fairness to the parties (see among others, ACFM Engineering & Construction Sdn Bhd v Esstar Vision Sdn Bhd and another appeal [2016] MLJU 1776, Bauer (Malaysia) Sdn Bhd v. Jack-In Pile (M) Sdn Bhd and Another Appeal [2018] 10 CLJ 293, Ireka Engineering and Construction Sdn Bhd v. PWC Corporation Sdn Bhd & Another Appeal [2019] 1 LNS 51, Meridian Contracts Sdn Bhd v Bauer (Malaysia) Sdn Bhd and another summon [2020] MLJU 1405 and MRCB Sentral Properties Sdn Bhd v GSIB Sdn Bhd and another case [2021] MLJU 2249).”. [42] Clause 2 of the TCS provides that: “FIXED PRICE CONTRACT / ORDER This is a fixed price contract / order. The prices are based on the currency stated in our contract / order. The prices shall be firm and are not subjected to any variation due to exchange rate, and or any other reasons stated in sub-contractor’s quotation (e.g. overtime, extra manpower, etc) unless otherwise approved by the purchaser in writing. All lengths of piping, wiring conduits etc … are deemed to be correct and sufficient for the total installation of the system and no positive variation is allowed.”. [43] Eakonmech argued that Clause 2 of the TCS expressly provides that the Sub-Contract is for a fixed price and is not subject to any variation unless otherwise approved in writing and that no positive variation is allowed. [44] However, the Adjudicator had proceeded to rewrite or failed to apply the terms of the Sub-Contract when he determined that design changes based on drawings are treated as variation works and relied on a purported “construction industry common practice” at paragraphs 3.2.7 and 3.2.8 of the AD. [45] The Adjudicator addressed “Issue No. 1 – Whether the Bills of Quantities of Construction Contract is subject to remeasurement under the terms and conditions of contract” and found that: “… 3.2.3 Based on the submission, I found the Claimant did not argue or claim any price/rate variants in their submission. 3.2.4 However, in relation to the quantities, I found that the Claimant has submitted and claimed different quantities derived from the alleged remeasurement of works based on as-built drawings against the original quantities in the Construction Contract. 3.2.5 After having reviewed and considered the submissions, I am persuaded that the Construction Contract does not indicate as a ‘provisional quantities’ contract (which the quantities can be subject to remeasurement) as there are no terms and conditions state that the Construction Contract is a provisional quantities contract and can be remeasured. Nonetheless, I am also persuaded that if there are design changes to the original scope of works of the Construction Contract shall be treated as variations; and only the affected scope of works should be adjusted accordingly by omission or addition of affected scope of works as variations in the Contract Sum. 3.2.6 Therefore, I determined that the quantities of unaffected or unchanged original scope of works should not be remeasured under this Construction Contract as this is not a provisional quantities contract. 3.2.7 I also determined that the Bills of Quantities of Construction Contract are firm quantities and not subject to remeasurement. Thus, the additional remeasured works’ quantities which are amounting to total RM2,399,405.95 as claimed by the Claimant based on the way of remeasurement of works cannot be accepted for adjusting the Contract Sum under the terms and conditions of the Construction Contract except any identified variation works due to changes to the original Construction Contract works. 3.2.8 Hence, I also determined that all those design changes to the original scope of works of the Construction Contract based on drawings issued shall be treated as variation works, and the Contract Sum shall be adjusted by omission of superseded original scope of works and addition of revised new scope of works accordingly to get the net (omission or addition) amounts of the variations for the adjustment of Contract Sum. Thus, the Interim Payment Certificate (IPC) No. 11 dated 27.08.2020 with Variation Works 1, 2 & 3 shall be accepted to be reviewed in this matter. 3.2.9 It should be noted that it is construction industry common practice and with reference to respective standard forms of contracts in the industry that drawings issued for the construction works are accepted as formal (written) instructions for any variations or changes to the works under the standard forms of contracts.”. [46] Eakonmech drew support from the decisions in Kining Exeton Sdn Bhd v Majlis Perbandaran Kuantan and another summon [2020] MLJU 659 and Genting Malaysia Berhad v. PLM Interiors Sdn Bhd [2020] 1 LNS 218 in submitting that, if the Adjudicator is allowed to draw upon his own knowledge and expertise, the parties must be afforded the opportunity to address him accordingly. Although the Adjudicator had directed for additional submissions, he did not invite the parties to submit on whether drawings can be accepted as an approval in writing for variations. [47] Had Eakonmech been given the opportunity to do so, it would have drawn the Adjudicator’s attention to the fact that the purported variations were not approved in writing by Eakonmech, thus not meeting the requirement of Clause 2 of the TCS. [48] The additional submissions mentioned by Eakonmech were explicitly referred to by the Adjudicator in the AD viz. – “2.12.4 The Respondent submitted additional documents on 5th September 2022 with regards to the Interim Payment Certificate (IPC) No. 11 dated 27.08.2020 under the direction of Adjudicator issued on 29th August 2022 pursuant to sections 25(b) & (c) of the Construction Industry Payment & Adjudication Act 2012. 2.12.5 The Claimant submitted the EXCEL Format of