Era Universe Development Sdn Bhd v Ken Lip Construction & Trading Sdn. Bhd (JA-24C-22-08/2023)

Akta Pembayaran dan Industri Pembinaan 2012 Dalam perkara Aturan 92 Kaedah 4 Kaedah-kaedah Mahkamah 2012 Dalam perkara Aturan 5, aturan 7, aturan 287 dan Aturan 92 Kaedah 4 Kaedah-Kaedah Mahkamah 2012 ANTARA ERA UNIVERSE DEVELOPMENT SDN. BHD. .. PLAINTIF KEN LIP CONSTRUCTIONS & TRADING SDN. BHD. …DEFENDAN GROUNDS OF JUDGMENT Introduction [1] These 2 cases were heard together where – Trading Sdn Bhd (“Ken Lip”) is seeking in Enclosure 1 for the adjudication decision dated 10.7.2023 (“Adjudication Decision”) be enforced pursuant to s. 28 of the Construction Industry Payment and Adjudication Act 2012 (“CIPAA”) and O. 69A r. 5 of the Rules of Court 2012 (“ROC”); and Sdn Bhd (“Era Universe”) is seeking in Enclosure 1 for the Adjudication Decision be set aside pursuant to paragraphs (b) and (d) of s. 15 of the CIPAA and O. 69A r. 3 of the ROC. [2] On the request of learned counsels for Ken Lip and Era Universe, on 19.11.2023 the High Court Judge in JA-24C-20-08/2023 allowed the case be transferred before me and be heard together with JA-24C-22- 4 08/2023 on the premise these cases related to the same parties and to the same Adjudication Decision. [3] As the backdrop of these cases, Era Universe is a real estate development company and is the developer of “Bandar Alam Masai Project” (“BAMP”). BAMP was built on the land owned by Marsland Development Sdn Bhd (“Marsland

the claim is time-barred under s. 6(1) of the Limitation Act 1953; and

Ken Lip failed to comply with clause 30 of the PAM Contract. Whether the Adjudication Claim is time-barred [15] Era Universe contends that for the purpose of any construction industry claim under CIPAA, the cause of action accrues from the work done and not from the date of the invoice. Era Universe’s contention is fortified by the two English cases of Henry Boot Construction Ltd. v Alstom Combined Cycles [2005] 1 WLR 3850; [2005] 3 All ER 832; [2005] 2 CLC 63; [2005] BLR 437; 101 Con LR 52; (2005) 102(30) LSG 28; [2005] EWCA Civ 814 and Consulting Concepts International Inc v Consumer Protection Association (Saudi Arabia) [2022] EWCA Civ 1699 where in summary the English Court of Appeal held that the cause of action for payment for services accrues when work is done unless clear words provide that the right to payment arises later. [16] Therefore, Era Universe submits that Ken Lip is only entitled to claim for the works which have been done from March 2017 to August

All invoices related to works done from 30.10.2016 to 28.2.2017 which is the payment certificate No. 1 to No. 5 (Phase 3A) amounting to RM4,184,111.42 and the invoices related to works done from 30.11.2016 to 28.2.2017 which is the payment certificate No. 1 to No. 4 (Phase 3B) amounting to RM1,432,728.82 (total sum of RM5,616,840.24) should have been dismissed by the Adjudicator as they are time-barred under s. 6(1) of the Limitation Act 1953 which reads – Limitation of actions of contract and tort and certain other actions 6.

Save as hereinafter provided the following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued, that is to say —

actions founded on a contract or on tort;

actions to enforce a recognisance;

actions to enforce an award;

actions to recover any sum recoverable by virtue of any written law other than a penalty or forfeiture or of a sum by way of penalty or forfeiture. [17] To address this issue, I find that Era Universe never disputes that Ken Lip had duly carried out and completed the Project works as well as the certificates of payment for the value of the works completed by Ken Lip. Nevertheless, the only issue raised is Ken Lip’s claim is time-barred. [18] On the reference to the English cases by Era Universe to support its argument, it is my considered view that Malaysian courts should not simply refer to English cases, but rather ought to search for local court decisions as preference. In this regard, there is a wealth of Malaysian cases dealing with this issue. In the celebrated case of Nasri v. Mesah [1970] CLJU 85; [1970] 1 LNS 85; [1971] 1 MLJ 32, Gill FJ said. "Now, what makes possible an action founded on a contract is its breach. In other words, a cause of action founded on a contract accrues on the date of its breach. Similarly, the right to sue on a contract accrues on its breach. In the case of actions founded on contract, therefore, time runs from breach (per Field J. in Gibbs v. Guild 8 QBD 296 302). In the case of actions founded on any other right, time runs from the date on which that right is infringed or there is a threat of its infringement (see Bolo's case LR 57 IA 74). It would seem clear, therefore, that the expressions "the right to sue accrues", "the cause of action accrues" and "the right of action accrues" mean one and the same thing when one speaks of the time from which the period of limitation as prescribed by law should run." [19] In similar veins, Jeffrey Tan FCJ in Tenaga Nasional Bhd v. Kamarstone [2014] 1 CLJ 207; [2014] 2 MLJ 749, said: "A cause of action founded on a contract accrues on the date of its breach, and in the case of a debt, the cause of action arises at the time when the debt could first have been recovered by action." [20] In light of the above, I agree with the Adjudicator’s finding that the cause of action runs from the date Era Universe breached the contract i.e the date as soon as Era Universe failed to comply with Ken Lip’s demand for the outstanding certified sums. Thus, Era Universe’s argument that Ken Lip’s claim is time-barred is untenable. Whether Ken Lip failed to comply with clause 30 of the PAM Contract [21] Era Universe avers that it has gone through a restructuring process in December 2021 wherein the company was restructured and taken over by another management known as Trident Broadway Sdn Bhd (“Trident Broadway”). Hence, Era Universe is managed and administered by the new management despite the name of the company remains. [22] Subsequently, vide the Heads of Agreement dated 3.12.2021 signed between Marsland Development, Era Universe and Trident Broadway, Era Universe contends that Trident Broadway has taken over the construction of BAMP. [23] Era Universe further asserts that the certificates of payment No. 1 to No. 29 were not in the possession of Trident Broadway (the new management of Era Universe). Era Universe avers that each of the certificates of payment should have been accompanied by particulars or description of works done and materials supplied by Ken Lip as required under clause 30.1 of PAM Contract which reads – Clause 30 Certificates and Payment Clause 30.1 The Contractor shall submit a payment application at the interim claim interval stated in the Appendix with complete details and particulars as required by the architect and quantity surveyor, to enable them to consider and ascertain the amount to be included in an interim certificate. Upon receipt of the Contractor’s details and particulars, the architect after having received the payment valuation from the quantity surveyor’s application, issue an interim certificate to the Employer with a copy to the Contractor, and the Employer shall thereafter pay the amount certified to the Contractor with the period of honouring certificates. Any failure by the Contractor to submit a payment application shall be deemed to be a waiver of his contractual entitlement for the interim certificate, and the architect may or may not issue an interim certificate under the circumstances. After the issuance of the certificate of practical completion, interim certificates shall be issued as and when further amounts are ascertained by the architect and quantity surveyor as payable to the Contractor by the Employer. [24] On this issue, I find that the restructuring of Era Universe is irrelevant to the dispute as the name of Era Universe still the same. There is no valid novation presented by Era Universe to suggest that Trident Broadway has taken away the Project from Era Universe. Thus, I hold that the restructuring process of Era Universe does not in any manner cease the contractual relationship between Era Universe and Ken Lip. The rights and obligations of both parties under the Letter of Acceptance continues. I am not unable to accept the Era Universe’s argument that Trident Broadway being the new management has no knowledge whether the old management of Era Universe had verified the sum claimed or paid by Era Universe. Being an eminent developer of the project of such magnitude, approximately 526 acres, it does not resonate to believe that Era Universe does not keep all important records especially invoices and payments from its sub-contractors, suppliers and creditors. [25] On the issue of no particulars in the certificates of payment raised by Era Universe, I find that under clause 30.1 of PAM Contract, Ken Lip’s obligation is only to submit payment applications at the interim claim intervals stated in the Appendix with complete details and particulars as required by the architect and quantity surveyor. Then the Project architect after having received the payment valuation from the quantity surveyor’s application, issue an interim certificate to Era Universe. Thus, Ken Lip has no obligation under clause 30.1 of PAM Contract to make any submission including the interim certificate to Era Universe. Instead, certificates of payment are issued by the Project architect accompanied with particulars or description of works done and materials supplied to Era Universe. In any event, all the progress claims have already been certified by the architect and quantity surveyor. [26] In the upshot, the Era Universe’s averment on the failure of Ken Lip to comply with clause 30.1 of PAM Contract as a ground to set aside the Adjudication Decision, in my view, has also no merit. [27] In the premise of the foregoing, I find that Era Universe failed to satisfy any condition set out in s. 15 of the CIPAA to set aside the Adjudication Decision. Thus, I dismiss the Era Universe’s application with costs. OS No. JA-24C-22-08/2023 [28] In this OS, Ken Lip seeks to enforce the Adjudication Decision pursuant to O. 69A, r. 5 of the Rules of Court 2012. [29] It is pivotal to note that s. 13 of the CIPAA states that an adjudication decision is binding unless it is set aside by the high court. The section reads – Effect of adjudication decision 13. The adjudication decision is binding unless —

it is set aside by the High Court on any of the grounds referred to in section 15;

the subject matter of the decision is settled by a written agreement between the parties; or

the dispute is finally decided by arbitration or the court. [30] I find that Ken Lip’s application is premised on the provision of s. 28 of the CIPAA which reads: "Enforcement of adjudication decision as judgment 28.

A party may enforce an adjudication decision by applying to the High Court for an order to enforce the adjudication decision as if it is a judgment or order of the High Court.

The High Court may make an order in respect of the adjudication decision either wholly or partly and may make an order in respect of interest on the adjudicated amount payable.

The order made under subsection (2) may be executed in accordance with the rules on execution of the orders or judgment of the High Court.". [31] On this application, I am guided by the Court of Appeal decision in Inai Kiara Sdn Bhd v. Puteri Nusantara Sdn Bhd [2019] 2 CLJ 229; [2019] 1 MLRA 207 where it was held that: "[24] Section 28 confers discretion on the High Court. Although there are no express terms as to how that discretion is to be exercised, in our opinion, the discretion must be exercised judiciously, having regard to the underlying facts and the applicable principles under CIPAA 2012. We must also bear in mind principles of statutory interpretation; that we cannot read into s. 28 terms which are not there, or give s. 28 a construction which cannot bear up when the other provisions in the Act are read and taken into consideration. [25] From a reading of CIPAA 2012, in particular, ss. 13, 15, 16, 27 and 31, it is plain that though s. 28 vests the High Court with discretionary power, it does not extend to requiring the applicant to show that there are no grounds for setting aside the adjudication decision under s. 15. All that the applicant needs to do is to satisfy the High Court that there is an adjudication decision that has been rendered in the applicant's favour, that there has been non-payment of the adjudicated sum by the date specified in the adjudication decision, and that there is no prohibition to the grant of the order that is sought. [26] By this, we mean that the adjudication decision has not been set aside or stayed, that there is no written settlement of the subject matter between the parties, or that there is no final decision rendered on the payment claim, whether made in arbitration or by a court of law. Once these matters are established as matters of fact, the order to enforce ought to be granted. When making the order, the High Court may also make appropriate orders in respect of the whole or part of the adjudicated sum including make orders on interest – see sub-s. 28(2)." [32] Applying the above legal principles to the facts in this case, Ken Lip has plainly satisfied the Court that –

the Adjudication Decision is clearly in Ken Lip’s favour;

there has been non-payment of the Adjudicated Sum by Era Universe within the time directed in the Adjudication Decision;

I have dismissed Era Universe’s application to set aside the Adjudication Decision in OS No. JA-24C-22-08/2023 above;

the Adjudication Decision is not subject to any stay of execution order;

there is no final decision rendered on the payment claim, whether made in arbitration or by a court of law; and

there is no written settlement of the Adjudication Decision between Ken Lip and Era Universe. [33] As Ken Lip has satisfied the above conditions, the order to enforce the Adjudication Decision must be granted. [34] It has to be noted that since the Adjudication Decision was validly obtained by Ken Lip, then it has to be given effect. Otherwise the core purpose and intent behind the enactment of CIPAA as to ensure that the successful claimant is paid promptly as to alleviate the cash flow problem faced by the claimant being a contractor in the building industry would be futile. Thus, I allow Ken Lip’s application in Enclosure 1 with no order as to costs. Date: 12.4.2025 -SIGNED- (SHAMSULBAHRI BIN HAJI IBRAHIM) Judge, High Court, Johor Bahru Counsels: For Ken Lip Construction & Trading Sdn – Azmi bin Azahar: Messrs.