Euroland & Development Sdn. Bhd. v Tack Yap Construction (M) Sdn. Bhd. (WA-24C-5-01/2018)

that is carried out urgently and without delay due to natural disaster, flood, landslide, ground subsidence, fire and other emergency and unforeseen circumstances;

that relates to national security or security related facilities which includes the construction of military and police facilities, military bases and camps, prison and detention camps, power plant and water treatment plant.” [21] As for an example in which the High Court considered whether or not the above exemption applies to the construction of a water pipes through a tunnel from Pahang to Selangor which then connects through another connecting pipe to a water treatment plant please see the case of Kerajaan Malaysia v Shimizu Corp & Ors [2018] MLJU 169. [22] The above are cases falling within what I would call the core or original jurisdiction of the CIPAA in that it is either conferred and thus 9 covered by the CIPAA or excluded or exempted from the application of the CIPAA. [23] In Terminal Perintis Sdn Bhd v Tan Ngee Hong Construction Sdn Bhd and another case [2017] MLJU 242 the High Court had categorized the various jurisdiction challenges as follows: “[72] Core Jurisdiction would be the question of whether the subject matter of the dispute is one which the Act has conferred on the Adjudicator. Thus if a contract is not a construction contract, but a shipping or mining contract or a contract for legal fees with respect to advice given in construction contract, or that the contract is with respect to construction of a dwelling house for a natural person, then this Court will interfere if the Adjudicator got it wrong. It is a case where the Adjudicator has no jurisdiction to begin with. So too if the construction contract is carried out wholly outside Malaysia. [73] If it is a question of the competence of the Adjudicator as in he has not been properly appointed in that what purported to be a Payment Claim, is not on the face of it a Payment Claim or that the Payment Claim was not served or that it was not expressly stated as a claim made under CIPAA, then this Court would be at liberty to set aside the Adjudication Decision on ground of excess of 10 jurisdiction. This is not only because the Adjudicator cannot decide on his own competence or capacity to adjudicate when the very validity of his appointment is questioned but also that it is part of the legislative intent that if there is non-compliance with a basic and essential requirement of CIPAA with respect to a Payment Claim under Section 5, then the Adjudication Proceedings and the Decision made would be a nullity. [74] 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. So for example an Adjudicator may not be able to decide on the defence of set-off arising out of costs of rectifying defective works if this has not been raised in the Payment Response. If he so decides, then this Court may set it aside as been made in excess of jurisdiction.” (emphasis added) 11 [24] The Federal Court in View Esteem Sdn Bhd v Bina Puri Holdings Berhad [2018] 2 MLJ 22 opined as follows: [16] The term ‘jurisdiction’ under the CIPAA is not used in the administrative or public law sense but in relation to matters within the scope of the CIPAA. On this point, in Terminal Perintis Sdn Bhd v Tan Ngee Hong Construction Sdn Bhd and another case [2017] MLJU 242 Lee Swee Seng J observed as follows (at para [70]): In the application of our CIPAA, we are free from the shackles of the language of administrative law and judicial review. The word ‘jurisdiction’ is used in s 15(d) as in the adjudicator having acted in ‘excess of his jurisdiction’ as a ground for setting aside an adjudication decision. It is also used in s 27(1) with respect to an adjudicator’s jurisdiction being limited to the matters raised in the payment claim and the payment response. Then there is a reference to it in s 27(2) with respect to extending his jurisdiction by way of agreement in writing to deal with matters not specifically raised in the payment claim and payment response. Finally there is the reference to a ‘jurisdictional’ challenge, which when raised, does not prevent the adjudicator from proceeding and completing the adjudication without 12 prejudice to the rights of any party to set it aside under s 15 or to oppose its enforcement under s 28 ... Issues as to whether there is a valid cause of action, does not go towards jurisdiction but rather to the merits of the claim ... [17] The learned judge also made note of the various types of jurisdictional complaints within the CIPAA which may be categorised as core jurisdiction, competence jurisdiction and contingent jurisdiction. The common feature in all of them is the presupposition that the CIPAA applies to determine if the adjudicator had kept within his jurisdiction.” [25] The Federal Court in View Esteem (supra) further made a distinction between a matter where the Adjudicator has jurisdiction to hear the matter but where in deciding the Adjudicator has exceeded his jurisdiction and one where the Adjudicator has no jurisdiction to begin with as follows: “[18] We are in agreement with the contention of the appellant that the error in the judgment of the Court of Appeal is the failure to recognise that the jurisdictional complaint in the present case is that the CIPAA did not apply at all because of s 41, and not an ‘excess of jurisdiction’ under s 15, on the basis that CIPAA applied. It is what is termed as an absolute lack of jurisdiction that may be taken up 13 at any time. On this point, the Singapore High Court case of Chip Hup Hup Kee Construction Pte Ltd v Ssangyong Engineering & Construction Co Ltd [2010] 1 SLR 658 had this to say: Thus, it seemed that when what was being alleged was an absolute lack of jurisdiction on the part of a particular tribunal or court to hear a particular dispute, ‘jurisdiction’ being used in the strict sense of capacity to hear, then if the tribunal concerned does not have such jurisdiction, any party to the dispute may assert the lack of jurisdiction at any stage and can never be held to be estopped from doing so or to have waived its right of protest. On the contrary, when it is a question of an irregularity of procedure or contingent jurisdiction or non-compliance with a statutory condition precedent to the validity of a step in the litigation, such irregularity or non-compliance can be waived because the effect of the waiver would not be to create or confer any jurisdiction that did not previously exist.” (emphasis added) [26] Section 41 of the CIPAA considered by the Federal Court above read as follows: “41. Savings 14 Nothing in this Act shall affect any proceedings relating to any payment dispute under a construction contract which had been commenced in any court or arbitration before the coming into operation of this Act.” [27] Indeed some jurisdictional challenge may involve convoluted facts combined with no less complicated questions of law to consider. The intention of Parliament under section 27(3) of the CIPAA is clearly not to ruffle and trouble the Adjudicator with such difficult question of mixed fact and law where jurisdiction is concerned, but to allow him to proceed as if he has jurisdiction and to hear the parties on the dispute and to make his finding of facts on the dispute and determine if there is any sums owing for work done or services rendered as claimed, taking into consideration the defenses and set-offs and then without prejudice to the rights of the party unhappy with the issue of jurisdiction, to allow that dissatisfied party to raise the jurisdictional challenge in the High Court. [28] In a case where there is no jurisdiction to begin with rather than one where there is jurisdiction but that the Adjudicator has exceeded his jurisdiction, the Court may even allow a determination to be made first before the Adjudication in a case that warrants it. [29] In View Esteem FC (supra) it was observed as follows: 15 “[19] It is our considered view that the appellant had rightly not invoked s 15 of the CIPAA at the beginning in making its application to challenge jurisdiction because it could not on the one hand complain that CIPAA did not apply to the case and yet on the other hand invoke a provision of CIPAA to seek relief. In the circumstances, our answer to question 1 posed in this appeal is in the positive in the first part and negative in the second part.” [30] It appears that in the present case learned counsel for the Plaintiff, Mr Conrad Young, had latched on to this dicta of the Federal Court and had advanced the proposition that the Plaintiff would not be in a position to do this under a section 15 application to set aside the Adjudication Decision on ground of excess of jurisdiction because there was no jurisdiction to begin with. [31] To be clear there are certain categories of clear cases of an absolute lack of jurisdiction where to allow the Claimant to proceed with the Statutory Adjudication would be a sheer waste of time only to have it later declared that that the whole Adjudication Proceeding and the Adjudication Decision is null and void for a absolute lack of original or core jurisdiction. This is clearly discernible in the Federal Court’s treatment of the Court of Appeal’s Decision as follows: 16 “[11] In the present case, we noted that the application of s 41 of the CIPAA was considered fully by the High Court on its merits. Although learned counsel for the respondent seemed to contend that the Court of Appeal had dealt on its merits the s 41 question, we take the view that the Court of Appeal did not do so. The view taken by the Court of Appeal was a procedural one, namely that the application raising the s 41 issue should be dismissed in limine because it was brought as a separate application and not as an application under s 15 of the CIPAA to set aside the adjudication decision. [12] With respect, we are of the view that the Court of Appeal was wrong as it failed to distinguish between a case where CIPAA did not apply at all and a case where the CIPAA applies but the adjudicator acting under the CIPAA had exceeded his jurisdiction. Section 15 of the CIPAA relates to the latter. Section 15 is predicated on the CIPAA applying to the case and to an adjudication decision made under the CIPAA. It relates specifically to a complaint that the adjudicator had ‘acted in excess of his jurisdiction’ presupposing the existence of the adjudicator’s jurisdiction under the CIPAA in the first place. 17 [13] Learned counsel for the respondent contended that a s 15 of the CIPAA challenge can only be made after an Adjudication decision is given. There are no provisions in the CIPAA which allow a party to seek court intervention in the midst of adjudication. [14] Learned counsel for the respondent fortified his argument that a s 15 of the CIPAA challenge can only be made after an adjudicator’s decision is given by making reference to s 27 of the CIPAA ....” (emphasis added) [32] Here the jurisdictional challenge seems to be one of core jurisdiction in that the construction contract is not one made in writing under section 2 of the CIPAA and so the Adjudicator would have no jurisdiction to hear the matter. The Adjudicator was not obliged to give his reasons for concluding that he did have jurisdiction as section 27(3) allows him to proceed as if he has. [33] I would agree that where we are dealing with the core or original jurisdiction, an application to challenge a pending Adjudication may be brought under a separate and stand alone application for a declaration to that effect and even an application to stay the Adjudication Proceeding if the circumstances of the case so demand. 18 [34] However whilst the procedure is available, it does not mean that in every instance that a challenge is made involving the core or original jurisdiction of the Adjudicator, the High Court must then invariably consider the challenge on its merits and rule accordingly and in the meanwhile to stay the Adjudication pending decision and thereafter to stay it altogether after the decision that the Adjudicator has no jurisdiction to proceed as the CIPAA does not apply. [35] Here is where, like all exercise of the powers of the High Court, on whether or not to grant a declaration or injunction to stay the Adjudication Proceeding, regard must be had to the issues that could only become clear after a finding of facts which at the application stage before the Court, might be hotly contested and not altogether clear and a special regard to the intention of Parliament as reflected in section 27(3) of the CIPAA as follows: “(3) Notwithstanding a jurisdictional challenge, the adjudicator may in his discretion proceed and complete the adjudication proceedings without prejudice to the rights of any party to apply to set aside the adjudication decision under section 15 or to oppose the application to enforce the adjudication decision under subsection 28(1).” 19 [36] What the CIPAA has allowed the Adjudicator to do is to exercise his discretion to proceed even in the light of a jurisdictional challenge as perfectly permitted for under section 27(3) of the CIPAA. An Adjudicator when faced with such a jurisdictional challenge may proceed, with or without giving any reasons, for being convinced that he has jurisdiction to hear the dispute. [37] Even when he has doubt he is still perfectly permitted to proceed to hear the parties and deliver his Adjudication Decision and it is for the party against whom the Decision is made to mount a challenge under section 15 of the CIPAA or to oppose the enforcement of the Decision under section 28(1) of the CIPAA or even to file a separate application to declare that the construction contract is not one made in writing under section 2 of the CIPAA. [38] By deciding to proceed to hear the dispute an Adjudicator need not fear that he is violating the principle of kompetenz-kompetenz. Whether or not an Adjudicator gave reasons for agreeing that he had jurisdiction, that does not fetter the High Court to consider the issue of a jurisdictional challenge afresh in a section 15 application for setting aside or section 28 application for enforcement of an Adjudication Decision or in an application for a declaration that the Adjudicator had no jurisdiction to begin with. 20 [39] Likewise if an Adjudicator declines or rejects his appointment on ground that he has no jurisdiction to hear the dispute, the Claimant may still proceed by asking the Director of Asian International Arbitration Centre (“AIAC”) to appoint a new Arbitrator. [40] In a case where the Adjudicator proceeded to dismiss or strike out the Claimant’s Payment Claim, the Claimant as a party aggrieved by the Decision may apply to set aside it under section 15(b) and/or (d) or under the inherent jurisdiction of the Court for a declaration that the Contract is one made in writing under section 2 of the CIPAA and as such the Adjudicator has jurisdiction. [41] Similarly in a case that warrants a stay of the Adjudication Proceeding on ground that based on the facts as disclosed on the Payment Claim or even taking into consideration the facts as disclosed in the Adjudication Claim if that has been served already, this Court is not fettered from granting the declaration and injunction sought to stay the Adjudication Proceeding in a case that merits it, having in mind the intention of Parliament as expressed in section 27(3) of the CIPAA. [42] One can imagine a clear cut case where the contract is one addressed in section 2 of the CIPAA where its application to is conferred and covered and under section 3 where its exemption and exclusion is 21 spelt out. To insist on proceeding with Adjudication on a contract that is clearly pure oral or a construction of a double-story residential bungalow house would be a sheer waste of time and money. [43] In a case where there is no jurisdiction to begin with rather than one where there is jurisdiction but that the Adjudicator has exceeded his jurisdiction, the Court is perfectly positioned and has the power to allow a determination to be made first before the Adjudication in a case that warrants it and even to allow an injunction to stay the Adjudication Proceeding. [44] However Parliament’s intention is clear in that there would be some jurisdictional challenges that may involve convoluted facts combined with no less complicated questions of law to consider. The intention of Parliament under section 27(3) of the CIPAA is clearly not to ruffle and trouble the Adjudicator with such difficult questions of mixed fact and law where jurisdiction is concerned, but to allow him to proceed as if he has jurisdiction and to hear the parties on the dispute and to make his finding of facts on the dispute and determine if there is any sums owing for work done or services rendered as claimed, taking into consideration the defenses and set-offs and then without prejudice to the rights of the party 22 unhappy with the issue of jurisdiction, to allow that dissatisfied party to raise the jurisdictional challenge in the High Court. [45] This will obviate the need for the Adjudicator to stop proceeding when he is in doubt and for party alleging a lack of jurisdiction to run to Court each time a jurisdictional challenge even of the type where it is alleged that there is a total or absolute lack of core or original jurisdiction. There is no prejudice to the party alleging a lack of jurisdiction of the core or original jurisdiction type as that can always be raised any time and even after an Adjudication Decision has been given. [46] Here there is a Letter of Award under which the Defendant as the Claimant in the Adjudication is claiming for balance due under each Interim Certificate certified by the architect. Prima facie it would appear that it is a Contract made in writing and the Adjudicator is entitled to give his reasons why he should decline jurisdiction or if he chooses to continue, he is entitled to proceed as if he has jurisdiction. [47] There is no need for the High Court to intervene at this stage for it is not a matter plain and obvious in the Payment Claim that there is no jurisdiction and further that much time would have been dissipated in the process of this application as the Adjudication Decision is to be completed 23 within 45 days from the date of service of an Adjudication Response or Adjudication Reply, whichever is the later. [48] At any rate as this application has already been made, it would be good for future guidance on the meaning of a “construction contract made in writing” for this Court to deliberate on the meaning of that expression. Whether a construction contract is one made in writing in the absence of terms of payment in the light of section 36 of the CIPAA [49] The fact that all the terms of the contract are not in writing or that a formal contract is to be executed by the parties as referred to in the Letter of Award but was finally not executed does not necessarily mean that the contract is not a contract in writing. [50] In Zana Bina Sdn Bhd v Cosmic Master Development Sdn Bhd and another case [2017] MLJU 146 there was a Letter of Award duly signed by the parties for a rescue Contractor to complete the balance Works but the “Contract Documents” to be signed was eventually not signed. That did not prevent the Court from agreeing with the Adjudicator that there was a binding construction contract made in writing for the purpose of Adjudication. The High Court observed as follows: 24 “[39] The Adjudicator had found as a matter of fact that the LoA dated 15.5.2015 is a construction contract made in writing. It was duly signed by the Managing Director of Cosmic Master and acknowledged acceptance by the Claimant, Zana Bina wherein it declared that it agreed and accepted all the terms and conditions set out in the LoA. The LoA and the supporting documents were marked as Exhibit P-2 in Enclosure 3 of the setting aside application. [40] Granted there were further documents as “Contract Documents” to be signed by the parties but these were nothing than incorporating all the agreed terms of the Tender referred to in Clause 1) of the LoA. It was to be signed within thirty (30) calendar days from the site possession date. [41] Site possession under Clause 3)(a) was on 1.6.2015. The contract duration for the Works under Clause 3)(b) shall be Six and a half (6 1/2) months commencing from the Site Possession Date. The Date of Completion of the Works was on 15.12.2015. The Contract Sum for the Works under Clause 3)(c) is RM16,146,000.00 and shall be on a Provisional Sum - Cost Plus (with Quantity) basis. [42] What is pertinent is that it is expressly provided for in Clause 2) of the LoA that: 25 “Pending the execution of the Contract Documents, the terms and conditions contained in this LOA and Appendix A (Summary of Contract Sum), Appendix B (PAM Form of Contract) and C (Formula of Recoupment of Advance Payment) herein attached shall collectively form a legal and binding contract between you and CMDSB.” (emphasis added) [43] The LoA was expressly stated in the caption to be for “the balance remaining works for Main Building Works, Infrastructure Works, M&E Works and Associated Works in Taman Seri Molek Perdana.” [44] In Appendix A of the Summary of Contract Sum is stated the breakdown of the Provisional Sums for the various items of Works. In the Interim Progress Claim No. 1 submitted by the Claimant to the Respondent dated 30.10.2015, the Architect and the QS have no difficulty certifying the amount and value of Works done for each of the items. [45] For Interim Progress Claim No. 2 submitted by the Claimant to the Respondent dated 12.12.2015, the QS had no problem certifying the valuation of Works done.” 26 [51] After referring to the Circular CIPAA 03 AIAC’s Guideline on the meaning of “Construction Contract Made in Writing” the High Court reasoned as follows: “[56] Clearly an expansive and generous interpretation is to be given to the meaning of a “contract made in writing” in line with the purpose of CIPAA which is captured to some extent by its long title that reads: “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.” [57] It must be borne in mind that generally it is the Employer that would rely on the fact that there is no construction contract in writing to defeat or delay a Payment Claim for work done. The Claimant/Contractor on the other hand has a limited time frame to complete the works and it cannot be that if he does the work, he is damned if there is no concluded contract in that further documents are to be signed! Conversely, if he does not commence work, as in this case when completion date is from the date of site possession 27 which had already been given, he runs the risk of late completion and be damned with LAD claims! [58] When the Respondent here had every opportunity to stop the Claimant from starting the balance Works until those further Contract Documents are signed, it must mean that the Respondent had waived that requirement or is otherwise estopped from contending otherwise by their very conduct. [59] The justification for that becomes more understandable when, as here, it is the Architect and QS appointed by the Respondent that had certified the Interim Progress Claims. [60] I would therefore hold that there is a construction contract in writing from which a dispute has arisen and that the Adjudicator has jurisdiction to hear the dispute and decide accordingly.” [52] It would be helpful to set out the said Circular in full, to appreciate the various issues involved as all these have been addressed by the Circular. It reads as follows: “ AIAC CIPAA CIRCULAR 03 (previously issued as KLRCA CIPAA CIRCULAR 03) CIRCULAR ON AIAC’S GUIDELINE ON THE MEANING OF “CONSTRUCTION CONTRACT MADE IN WRITING” 28 The Construction Industry Payment and Adjudication Act 2012 (“CIPAA”) came into operation on 15 April 2014. Section 2 of the Act provides that statutory adjudication regime shall apply to construction contracts made in writing. However, no definition or further elaboration is provided in the Act as to what ‘construction contract made in writing’ means. Given the fact that there are various means by which a construction contract may be made, a clear guideline on the meaning of a ‘construction contract made in writing’ will ensure that parties to a construction contract are guided as to whether or not payment disputes arising under their contract can be referred to adjudication under the Act. Further, it will eliminate the need for the adjudicator who may not be legally trained to grapple with the complexity of the issue of whether a construction contract is in writing. As such the AIAC is of the view that it would be expedient and/or necessary to provide clear guidance and definition as to what the phrase ‘construction contract made in writing’ mean, for giving full effect and the better carrying out of the provisions of the Act. The AIAC adopts the following definition of a ‘construction contract in writing’: 29 ’CONSTRUCTION CONTRACT IN WRITING’

There is a contract in writing:- a) if the contract is made in writing (whether or not it is signed by the parties); b) if the contract is made by exchange of communications in writing; or c) if the contract is evidenced in writing.

Where parties agree otherwise than in writing by reference to terms which are in writing, they make a contract in writing.

A contract is evidenced in writing if a contract made otherwise than in writing is recorded by one of the parties, or by a third party, with the authority of the parties to the contract. The AIAC Guideline on Construction Contract in Writing shall apply to all adjudication cases commenced under CIPAA. A copy of the AIAC Guideline can be found at: www.aiac.world Dated 28th day of April, 2014. -Sgd-Professor Datuk Sundra Rajoo Director of AIAC” (emphasis added) 30 [53] In the present case it is unarguable that the construction contract was made in writing as in that it was evidenced in writing with the Bill of Quantities and pricing dated 18.2.2016 read together with the Letter of Award dated 19.2.2016 wherein the Plaintiff appointed the Defendant as the main contractor to complete the works for the Project in 24 months beginning April 2016 (see Exhibits “HJN-1” and “HJN-2” of the Defendant’s Affidavit No.1 in Enclosure 8). The Submission of Bill of Quantities dated 18.2.2018 from the Defendant to the Plaintiff is reproduced below: Cadangan Membina 347 Unit Pangsapuri Di Atas Lot 2223, Damai Perdana, Cheras, Daerah Hulu Langat, Selangor Darul Ehsan - Submission of Bill of Quantities (B.Q) The above-mentioned project refers. We are pleased to submit the duly filled & signed final Bill of Quantities (B.Q), amounting to RM 76,800,000.00 (Ringgit Malaysia: Seventy Six Million and Eight Hundred Thousand Only) excluding GST and subject to the following terms and conditions:-

The progress claim shall be submitted on monthly basis.

The payment shall be honuored within 30 days from the date of certification.

Materials such as concrete, BRC mesh and reinforcement bar shall be paid on behalf by your good company and to be reimbursed in our monthly progress claim.

The price quoted based on 24 calendar months as the construction period.

The price quoted based on the scope of work as stipulated in Bill No.1 (Preliminaries) and Bill No.2 (Main Building Works). [54] The Bill of Quantities submitted by the Defendant to the Plaintiff is as follows: CADANGAN MEMBINA 347 UNIT PANGSAPURI DI ATAS 2223, DAMAI PERDANA, MUKIN CHERAS, DAERAH HULU LANGAT, SELANGOR DARUL EHSAN ITEM DESCRIPTION AMOUNT (RM) A B

Remark:- 24 months construction period. 5,822,304.66 70,977,695.34 32

Price quoted is excluding GST

Performance bond to be waived. TOTAL FORM OF TENDER SUM 76,800,000.00 Built Up Area: 741, 674 Sqft Cost Per M2 RM1114.60/m2 Cost Per ft2 RM103.55/ft2 [55] The relevant parts of the Letter of Award dated 19.2.2016 issued by the Plaintiff to the Defendant and duly signed by both parties read as follows: CADANGAN MEMBINA 322 UNIT PANGSAPURI DI ATAS LOT 2223, DAMAI PERDANA, CHERAS, DAERAH HULU LANGAT, SELANGOR DARUL EHSAN Letter of Award – Main contractor (super structure) Reference is made to your recent tender submission of the above-mentioned works.

1.1 We are pleased to inform you that your tender sum of RM76,800,000.00 (Ringgit Malaysia seventy six million and eight hundred thousand only) excluding goods and services tax (GST) is accepted subject to the terms and conditions of the contract and 33 this letter.

1.2

(A) The computation of the revised Tender Sum is arrived at :- a) Bill No. 1 – Preliminaries b) Bill No. 2 – Main Building Works RM 5,822,304.66 70,977,695.34 76,800,000.00 ... ... [56] Learned counsel for the Plaintiff submitted that there were no terms on the time and manner of payment for work done and that being an essential term of a construct contract, the documents in writing do not constitute a “construction contract made in writing” as required under section 2 of the CIPAA. [57] Parliament in its wisdom, as if anticipating that a party to the construction contract may be raising this had provided for it quite exhaustively under section 36 of the CIPAA as follows: “36. Default Provisions in the Absence of Terms of Payment 34

Unless otherwise agreed by the parties, a party who has agreed to carry out construction work or provide construction consultancy services under a construction contract has the right to progress payment at a value calculated by reference to—

The contract price for the construction work or construction consultancy services;

Any other rate specified in the construction contract;

Any variation agreed to by the parties to the construction contract by which the contract price or any other rate specified in the construction contract is to be adjusted; and

The estimated reasonable cost of rectifying any defect or correcting any non-conformance or the diminution in the value of the construction work or construction consultancy services performed, whichever is more reasonable.

In the absence of any of the matters referred to in paragraphs (1)(a) to (d), reference shall be made to: 35

The fees prescribed by the relevant regulatory board under any written law; or

If there are no prescribed fees referred to in paragraph (a), the fair and reasonable prices or rates prevailing in the construction industry at the time of the carrying out of the construction work or the construction consultancy services.

The frequency of progress payment is:

Monthly, for construction work and construction consultancy services; and

Upon the delivery of supply, for the supply of construction materials, equipment or workers in connection with a construction contract.

The due date for payment under subsection (3) is thirty calendar days from the receipt of the invoice.” (emphasis added) [58] In Exhibit TKH 1 corresponding to Exhibit HJN 1, the Defendant had submitted the BQ and listed out Conditions 1-5 for the sum of RM76.8m. In Exhibit TKH 2 corresponding to Exhibit HJN 2, the Plaintiff had accepted 36 the offer subject to the “terms and conditions of the contract and of this letter.” [59] By Clause 13.0 of the Letter of Award also exhibited as Exhibit TKH 2 it is further provided that the Letter of Award shall constitute a legal and binding contract and the parties had signed at page 10 thereof. [60] Learned counsel for the Plaintiff was at pains to point out what he said is of prime importance in that it has no reference to any right to progress payment in the Letter of Award. Learned counsel for the Plaintiff argued that the term in dispute is not in writing and so the contract is not a contract in writing. The term in dispute is said to be whether there is a contractual entitlement to progress claim in writing. [61] I had to read again Condition 2 of the BQ submitted to make sure my eyes did not play any tricks on me and it did say that: “2. The payment shall be honored within 30 days from the date of certification.” [62] The architect of the Project had no problem certifying the various Certificates under which the Defendant here is claiming as Claimant in the Adjudication the balance of each Certificate not paid. However learned counsel for the Plaintiff had urged upon this Court that the submission of the BQ dated 18.2.2016 with the 5 Conditions was an offer and that the 37 Letter of Award dated 19.2.2016 without reference to the payment term was the counter-offer which cancelled the original offer and was a fresh offer which was accepted when the Defendant signed on it on 23.2.2016. [63] See the case of Emas Kiara Sdn. Bhd. v. Michael Joseph Monteiro & Ors; Farcoll Estate Sdn. Bhd. & Ors, (Interveners) [2017] 3 CLJ 605). [64] Even assuming for a moment that there is no agreement on the frequency of payment, section 36(3) of the CIPAA would apply for it states that the frequency of progress payment is monthly for construction work done. [65] Learned counsel for the Plaintiff said that section 36(3) of the CIPAA would only apply if in the first place the contract in writing has a progress payment clause but that that clause does not state when the progress payment is to be made. [66] I must confess my difficulty in following the flow and force of that argument in the light of the opening clause in section 36(1) of the CIPAA which expressly declares that the party doing the construction work, normally the Claimant, “has the right to progress payment”. [67] Section 36 of the CIPAA is titled as “Default Provisions in the Absence of Terms of Payment” and by that in the absence of the 38 presence of a payment clause then the default provisions would apply. The default provisions on the fact and frequency of payment would kick in “unless otherwise agreed by the parties” as the opening qualifying words of section 36(1) are careful to clearly state what is intended by default. Reading English as it stands, and having regard to the syntax and structure of the sentence, we would be doing violence to the language and defacing it if we were to read that there must first be a “payment clause”. [68] In any event the “payment clause” is there in Condition 1 of the submitted BQ accepted by the Plaintiff in the Letter of Award and it reads: “The payment claim shall be submitted on monthly basis.” [69] To put the matter beyond a pale of doubt, section 36(4) provides that “The due date for payment under subsection (3) is thirty calendar days from the receipt of the invoice.” [70] Learned counsel for the Plaintiff had placed tremendous emphasis on the case of RJT Consulting Engineers Ltd. v. DM Engineering Ltd. [2002] 1 WLR 2344 where the English Court of Appeal had occasion to deal with a similar provision (and restriction of application) in the English Housing Grants, Construction and Regeneration Act 1996 (“English 1996 Act”), namely section 107, which (like section 2 of the CIPAA) provided for recourse to adjudication for parties in construction contracts. 39 [71] Learned counsel Mr Conrad for the Plaintiff argued that we should follow the approach of the English Court of Appeal where all the agreement and not part of it, should be in writing as follows: “19 On the point of construction of section 107, what has to be evidenced in writing is, literally, the agreement, which means all of it, not part of it. A record of the agreement also suggests a complete agreement, not a partial one. The only exception to the generality of that construction is the instance falling within subsection (5) where the material or relevant parts alleged and not denied in the written submissions in the adjudication proceedings are sufficient. Unfortunately, I do not think subsection (5) can so dominate the interpretation of the section as a whole so as to limit what needs to be evidenced in writing simply to the material terms raised in the arbitration. It must be remembered that by virtue of section 107(1) the need for an agreement in writing is the precondition for the application of Part II of the Act, not just the jurisdictional threshold for a reference to adjudication. I say ‘unfortunately’ because, like Auld LJ whose judgment I have now read in draft, I would regard it as a pity if too much ‘jurisdictional wrangling’ were to limit the opportunities for 40 expeditious adjudication having an interim effect only. No doubt adjudicators will be robust in excluding the trivial from the ambit of the agreement and the matter must be entrusted to their common sense. Here we have a comparatively simple oral agreement about the terms of which there may be little, if any, dispute. For the consulting engineers to take a point objecting to adjudication in those circumstances may be open to the criticism that they were taking a technical point but as it was one open to them and it is good, they cannot be faulted. In my judgment they were entitled to the declaration which they sought and I would accordingly allow the appeal and grant them that relief.”(emphasis added) [72] However, as helpfully pointed out by Mr Richard Kok, learned counsel for the Defendant, the position in the UK has changed and they no longer require a construction contract in writing for statutory adjudication. Whilst previously the English 1996 Act, in section 107(1) provides that statutory adjudication only applies to a construction contract in writing, this has been repealed by section 139 of the Local Democracy, Economic Development and Construction Act 2009 to buffer the unhappy outcome brought about by the Court of Appeal’s decision. In fact, the Explanatory Notes to the Local Democracy, Economic Development and Construction Bill alluded in 41 Clause 135 to the fact that section 107 had been interpreted restrictively by the courts such that all of the non-trivial terms of construction contracts must be “in writing”. See also the case of PT Building Services Limited v ROK Build Limited [2008] EWHC 3434. [73] At any rate the English 1996 Act does not have the equivalent of our section 36 of the CIPAA which allows for default terms to be imported where the right and frequency of payment is concerned. [74] Whether or not the parties have orally agreed to provide otherwise in the contract entered into where payment is concerned is a matter which the Adjudicator is well positioned to make a finding of fact and even if he should get it wrong there, there is already the Main Suit that had been commenced by the Defendant here as Plaintiff in that Main Suit which when disposed of, would bring finality to the dispute. Pronouncement [75] Learned counsel for the Plaintiff argued that section 2 of the CIPAA must be addressed first for that is the gateway jurisdiction clause. I have no quarrel with that proposition. Having found that it is a “construction contract made in writing” and having found that the default provision with respect to frequency of payment for construction work done applies, the Defendant as 42 the Claimant in the Adjudication must be allowed to proceed with the Statutory Adjudication under the CIPAA. [76] I had therefore dismissed both the Originating Summons and the application for an injunction to stay the Adjudication Proceeding commenced by the Defendant as the Claimant there. By consent parties had agreed that the Plaintiff as the Respondent there in the Adjudication shall file their Adjudication Response on or before 16.3.18. [77] As for costs I had, after hearing the parties, allowed the Defendant costs of RM10,000.00 to be paid by the Plaintiff. Dated: 28 June 2018. - signed - LEE SWEE SENG Judge Construction Court High Court, Kuala Lumpur 43 For Plaintiff : Conrad Young, K.Thavanesan and SN Tan (Messrs Sreenevasan Young) For Defendant : Richard Kok and Winnou Chung (Messrs Rhiza & Richard) Date of Decision: 8 March 2018.