Granstep Development Sdn Bhd v Tan Chong Heng Construction Sdn Bhd (WA-24C-247-12/2020)

A declaration that the purported reference of disputes to adjudication by the Defendant vide its Notice of Adjudication (Form 3) dated 1.7.2020 i.e. the 2nd Adjudication Proceedings is invalid, a nullity and is of no effect because of the prior and existing 1st Adjudicating Proceedings that had not been discontinued or withdrawn as provided in section 17 Construction Industry Payment and Adjudication Act 2012 (“CIPAA”);

A declaration that any adjudicator appointed in the 2nd Adjudication Proceedings did not have the jurisdiction as his jurisdiction is derived from Payment Claim (Form 1) dated 15.6.2020 which is invalid and a nullity as it purports to be revised Payment Claim (Form 1) dated 27.2.2020; 3

An injunction that the Defendant whether by itself, its agents, servants, employees, directors or otherwise howsoever be restrained from pursuing and proceeding with its purported reference of disputes to adjudication by the Defendant vide its Notice of Adjudication (Form 3) dated 13.3.2020, i.e. the 1st Adjudication Proceedings and/or Notice of Adjudication (Form 3) dated 1.7.2020. i.e. the 2nd Adjudication Proceedings; …”. [2] By the time the O.S. was heard, a Consent Order had been entered on 5.1.2021 for a separate application by the Plaintiff in encl. 5 for an interim injunction that the Defendant be restrained from pursuing and proceeding with the adjudication proceedings until judgment in the suit and for a stay of the adjudication proceedings until the disposal of the action. The parties agreed that the adjudication decision shall only be delivered after full and final disposal of encl. 1. There is therefore no necessity for the Court to deal with prayer (4) in encl. 1 as above quoted. 4 [3] The Court had considered the cause papers in encls. 2, 11 and 12, which are the parties’ respective affidavits in support and in reply, and the written submissions in encls. 13, 16, 18, 19, 20 and 22 complete with several flowcharts and a table showing the comparative study undertaken by the Plaintiff’s solicitors on the Building and Construction Industry Security of Payment legislation in Singapore and Australia, in particular the States of New South Wales and Victoria, as well as the oral submissions by Mr. Richard Kok Chi Wei for the Plaintiff and Mr. V. Ganesalingam for the Defendant, and found that there is no basis for the Court to grant the declarations as prayed by the Plaintiff. The Plaintiff’s application was accordingly dismissed with costs of RM5,000.00 subject to allocatur. [4] The full reasons for the decision are set out in the ensuing part of this Grounds of Judgment. 5 Background Facts [5] By a Letter of Award dated 8.2.2018 (‘LoA’), the Plaintiff, through DMP Architects Sdn Bhd, appointed the Defendant as the main contractor to carry out the supply of labour, plant and materials for the construction, completion and maintenance of the Main Building Works including Structural, Architectural, Mechanical, Electrical and Infrastructure Works (‘Works’) for the project known as “Cadangan Membina Dan Menyiapkan Pembangunan Perumahan (Skim 3) Yang Mengandungi: (A) 28 Unit Rumah Berkembar 3 Tingkat (50’ x 70’), (I) Type A, A1, A2 & A3 Di Atas PT 15855 – PT 15868, (II) Type B, B1, B2 & B3 Di Atas PT 15922 – PT 15935; (B) 13 Unit Rumah Teres Superlink 3 Tingkat Type D, D1, D2 & D3 Di Atas PT 15896 – PT 15908 (22’ x 70’); (C) 39 Unit Rumah Teres Superlink 3 Tingkat Type C, C1, C2, C3, C4, & C5 Di Atas PT15869 – PT15894 dan PT 15909 – PT 15921 (24’ x 70’); (D) 1 Unit Pondok Pengawal Di Atas Sebahagian Lot Lama 1287, Bandar Ampang, Seksyen 14, Daerah Hulu Langat, Selangor Darul Ehsan For Messrs Granstep Development Sdn Bhd” (‘Project’) for a fixed price lump sum of RM51,911,000.00 (‘Contract’). 6 [6] On 27.2.2020, the Defendant initiated adjudication proceedings against the Plaintiff under the Construction Industry Payment and Adjudication Act 2012 [Act 746] (‘CIPAA’) by submitting its Payment Claim under s 5 CIPAA to claim for the sum of RM4,101,360.86 as unpaid amounts under certified Payment Certificate Nos. 1 until 13 and uncertified payment for works done, variation order and loss and expenses under Progress Claim No. 14 (‘1st Payment Claim’). [7] On 3.3.2020, the Defendant filed O.S. No. NA-24NCC-6-03/2020 at the Seremban High Court to apply for a judicial management order (‘JM Application’) under s 405 of the Companies Act 2016 [Act 777] (‘CA 2016’). On 20.7.2020, the High Court allowed the Plaintiff’s application to intervene in the JM Application and leave was granted for the Plaintiff to commence and continue legal proceedings against the Defendant. [8] Meanwhile, the Plaintiff submitted its Payment Response pursuant to s 6 CIPAA on 11.3.2020 disputing the amount claimed by the 7 Defendant on the ground of fundamental breach of contract which had led to the issuance of the Notice of Default dated 12.11.2019 and Notice of Determination of the Defendant’s employment dated 29.11.2019. [9] This was followed with the submission of the Notice of Adjudication (Form 3) dated 13.3.2020 under ss 7 and 8 CIPAA (‘1st Form 3’). In para 8 of the 1st Form 3, the Defendant requested the Director of the Asian International Arbitration Centre (‘AIAC’) to appoint an adjudicator as provided under ss 21(b)(ii) and 23 CIPAA. [10] On 12.5.2020, the Defendant issued the Notice to the Director of AIAC to register the adjudication (Form 3A) and Request to the Director of AIAC to appoint an Adjudicator (Form 5). [11] On 21.5.2020, the AIAC informed the parties that due to the passing of their Director, Mr. Vinayak P. Pradhan on 8.3.2020, the AIAC will not proceed with Form 5. 8 [12] The Defendant then submitted and served a Payment Claim dated 15.6.2020 on the Plaintiff to claim for the sum of RM4,125,162.19 as unpaid amounts under certified Payment Certificate Nos. 1 until 13 and uncertified payment for works done, variation order, loss and expenses and material on site under Progress Claim No. 14 (‘2nd Payment Claim’). [13] Subsequently, the Defendant submitted the Notice of Adjudication (Form 3) dated 1.7.2020 (‘2nd Form 3’) and the Notice to the Director of AIAC to register the adjudication (‘2nd Form 3A) and Request to the Director of AIAC to appoint an adjudicator (‘2nd Form 5), both dated 16.7.2020. [14] According to the Plaintiff’s solicitor’s letter dated 15.12.2020 –

the Plaintiff had served a second Payment Response dated 26.6.2020 on the Defendant whilst reserving its rights to challenge the “unconventional step” taken by the Defendant in the adjudication proceedings; 9

by a letter dated 21.5.2020, AIAC replied to the Defendant’s letter dated 12.5.2020 and assigned case reference No. AIAC/D/ADJ- 3158-2020 (‘Adjudication No. 3158’) to the first adjudication proceedings but informed that there was no Director at the AIAC;

by a letter dated 21.7.2020, AIAC replied to the Defendant’s letter dated 16.7.2020 enclosing the 2nd Form 3A and 2nd Form 5. AIAC referred to documents from the first and second adjudication proceedings and reiterated that there was no Director at the AIAC. The same Adjudication No. 3158 was used;

by a letter dated 1.12.2020, AIAC replied to the Defendant’s letter of even date enclosing the 2nd Form 3A and 2nd Form 5 and reiterated that there was no Director at the AIAC. The same Adjudication No. 3158 was used; and

by a letter dated 4.12.2020, AIAC appointed an adjudicator for Adjudication No. 3158. 10 [15] Mr. Chan Keng Hoe is the adjudicator who was appointed by AIAC (‘Adjudicator’) and he had written a letter dated 10.12.2020 which prompted the issuance of the Plaintiff’s solicitor’s letter on 15.12.2020. In that letter, the Plaintiff’s solicitors appraised the Adjudicator about the chronology of events beginning with the service of the 1st Payment Claim. The solicitors conveyed their client’s position that the CIPAA does not apply to the dispute between the parties and that the case involved an absolute lack of jurisdiction rather than “jurisdiction” as referred to in s 27 CIPAA. [16] The Plaintiff contends that there are in effect, two adjudication proceedings i.e. the first, upon the issuance and service of the 1st Form 3 and the second, upon the issuance and service of the 2nd Form 3 and that the first adjudication proceedings is a nullity as it had not been withdrawn under s 17 CIPAA. The Plaintiff additionally contends that the Defendant cannot resort to adjudication under the CIPAA because it is under a legal moratorium and it would be against ss 13, 14, 15 and 37 CIPAA. 11 [17] However, on 23.12.2020, the Adjudicator proceeded with the adjudication and on 31.12.2020, he directed the Defendant to file the Adjudication Reply (Form 9) by 7.1.2021. Is there delay in the filing of the O.S.? [18] Before I proceed to discuss the main issues relating to this suit, mention has to be made of the fact that the Defendant had alleged there is delay on the part of the Plaintiff in filing the O.S. when the 2nd Payment Claim is dated 15.6.2020 and was served on the Plaintiff on 16.6.2020. The Plaintiff waited until 18.12.2020 before filing the O.S. [19] Whilst I agree with the Defendant that the Plaintiff ought to have instituted this suit much earlier, nevertheless, delay is only a factor to be taken into account and is by no means decisive of the substantive issues which deserve careful and complete consideration by the Court. 12 The Issues [20] The issues which arise for determination in respect of the Plaintiff’s application for declaratory reliefs are as follows:

whether this Court can hear and decide on the issue of jurisdiction of the Adjudicator and the applicability of the CIPAA to the dispute between the Plaintiff and the Defendant in this action;

whether the adjudication proceedings pursuant to the 2nd Payment Claim and 2nd Form 3 is invalid and a nullity; and

whether the JM Application has the effect of taking the dispute between the Plaintiff and the Defendant outside the ambit and jurisdiction of the CIPAA. 13 1st Issue: Whether this Court can hear and decide on the issue of jurisdiction of the Adjudicator and the applicability of the CIPAA to the dispute between the Plaintiff and the Defendant in this action [21] The Plaintiff’s counsel relied on the judgments in View Esteem Sdn Bhd v Bina Puri Holdings Bhd [2018] 2 MLJ 22, Chip Hup Hup Kee Construction Pte Ltd v Ssangyong Engineering & Construction Co Ltd [2010] 1 SLR 658, Euroland & Development Sdn Bhd v Tack Yap Construction (M) Sdn Bhd [2018] MLJU 861, Syarikat TD Sdn Bhd v Jeks Engineering Sdn Bhd and another case [2019] MLJU 1754 and Liew Piang Voon v WLT Project Management Sdn Bhd [2020] MLJU 1431 to support the submission that the jurisdictional complaint in this case is an absolute lack of jurisdiction or core jurisdiction on the part of the Adjudicator to adjudicate the dispute between the parties and therefore, the Plaintiff is entitled to challenge the pending adjudication under a separate and stand-alone application for a declaration. [22] On the other hand, the Defendant’s counsel cited the decisions in VVO Construction Sdn Bhd v. Bina MYK Sdn Bhd & Another Case [2017] 14 MLRHU 33, UDA Holdings Berhad v. Bisraya Construction Sdn Bhd & Anor And Another Appeal [2014] MLJU 1738 and Mega Sasa Sdn Bhd v. Kinta Bakti Sdn Bhd & Ors [2019] MLRHU 1000 in advancing the argument that the Adjudicator took the correct step by asking the parties to submit on the issue of jurisdiction. Under sub-s 27(3) CIPAA, the Adjudicator may, in his discretion, choose to decide on the jurisdictional issue or he may elect not to do so and proceed and complete the adjudication proceedings. If the Adjudicator opts for the former, his decision on the jurisdictional challenge can be scrutinised by the High Court in an application to set aside the adjudication decision and/ or to enforce the same under ss 15 and 28 of the CIPAA, respectively. The Defendant advocated that the issue on jurisdiction should be taken up first before the Adjudicator instead of before this Court. [23] I have no qualms with the Defendant’s interpretation of sub-s 27(3) CIPAA, however, with respect, I disagree with the submission that the Plaintiff ought to have left the jurisdictional challenge to the Adjudicator rather than to institute this suit in the court. 15 [24] Judging by the Plaintiff’s grounds of challenge, it is beyond doubt that the complaint is that there is an absolute lack of jurisdiction on the part of the Adjudicator to hear the dispute between the parties. In this context, the word “jurisdiction” is used in the sense of the capacity to hear the parties. It is therefore open to the Plaintiff to assert the lack of jurisdiction at any stage; it is not estopped from doing so and nor can it be said that the Plaintiff has waived its right of protest [see Chip Hup Hup Kee Construction (supra, at p 675), Ideal City Development Sdn Bhd v PWC Bina Sdn Bhd and other appeals [2018] MLJU 1711 at para 28 and View Esteem (supra, at pp 33 - 34)]. [25] Further, in my opinion, the Plaintiff’s complaint clearly falls within the category of core jurisdiction of the Adjudicator. Core jurisdiction concerns the question of whether the subject matter of the dispute is one which the CIPAA has conferred on the adjudicator (see paras 72- 74 in Terminal Perintis Sdn Bhd v Tan Ngee Hong Construction Sdn Bhd and another case [2017] MLJU 242 and paras 16 and 17 in View Esteem). 16 [26] I had conveyed my views to the learned counsels on the first date of hearing that the application in encl. 1 raises issues pertaining to an absolute lack of jurisdiction or core jurisdiction and hence, can be heard by this Court at this stage. Nevertheless, I am mindful that court intervention by way of declarations to bring adjudication proceedings to a standstill or at an end altogether must be exercised cautiously and sparingly [see Liew Piang Voon (supra)]. 2nd Issue: Whether the second adjudication proceedings pursuant to the 2nd Payment Claim and 2nd Form 3 is invalid and a nullity - The parties’ submissions [27] To the Plaintiff, the answer to the 2nd Issue is in the affirmative. The reasons as to why the Plaintiff takes this view can be seen in paras 5(d) to (f) in the Statement pursuant to O. 7, r. 3(1) of the Rules of Court 2012 (‘RoC 2012’) in encl. 1, namely that – 17

the first adjudication proceeding was commenced when the 1st Form 3 was issued and served on the Plaintiff. To-date, the first adjudication proceedings is still pending and have not been withdrawn. There cannot be the second adjudication proceedings or any other concurrent adjudication proceeding;

the 1st Payment Claim cannot be “revised” or “superseded” by the 2nd Payment Claim because the Plaintiff did not agree to it and the first adjudication proceeding is pending. The 2nd Payment Claim is invalid and a nullity; and

the 1st Form 3 cannot be “revised” or “superseded” by the 2nd Form 3. Hence, there is no valid second adjudication proceedings. [28] Mr. Richard Kok made extensive reference to the case authorities and the provisions in Parts II and III of the CIPAA which lay out the procedure for the initiation of adjudication of disputes over “payment”, 18 which is defined in s 4 of the CIPAA as “payment for work done or services rendered under the express terms of a construction contract”, and regarding the adjudicator. The provisions are ss 5, 6, 7, 8, 9, 17, 21, 23 and 27. [29] In addition, the learned counsel relied on Rule 2 of the AIAC Adjudication Rules & Procedure (‘AIAC Rules’) and the comparative study on the provisions governing the withdrawal of adjudication applications in Singapore (s 20 of the Building and Construction Industry Security of Payment Act 2004), and the States of New South Wales (ss 17A and 26 of the Building and Construction Industry Security of Payment Act 1999) and Victoria (s 28 of the Building and Construction Industry Security of Payment Act 2002) in Australia. These provisions are set out below: Rule 2 of the AIAC Rules: “Rule 2 Commencement & Registration of Adjudication 19

The Claimant shall upon serving a notice of adjudication on the Respondent pursuant to Section 8(1) of the Act register the adjudication matter at the AIAC by serving a notice on the Director of the AIAC containing the following particulars and enclosing a copy of the Payment Claim and Payment Response (if any) and the Notice of Adjudication: a) the names and service addresses of the claimant and the respondent; b) the date of service of the Notice of Adjudication; c) the date of service of the Payment Claim; d) the date of service of the Payment Response (if any); e) the particulars of the relevant contract, comprising – i) the project title or reference, or a brief description of the project; ii) the contract number or a brief description of the contract; 20 iii) the date the contract was made; f) the claimed amount; g) the response amount (if any); h) a brief description of the dispute; i) the remedy sought.

The notice in sub-Rule 2(1) must be accompanied with a non-refundable registration fee payable to the AIAC in the amount of that prescribed in Schedule III herein.”. s 20 of the Building and Construction Industry Security of Payment Act 2004 (Singapore): “Withdrawal of adjudication applications and adjudication review applications

(1) An adjudication application may be withdrawn by the claimant at any time upon serving a notice of withdrawal on – 21

the adjudicator;

the authorised nominating body which appointed the adjudicator; and

the respondent.

An adjudication review application may be withdrawn by the party who lodged the application at any time upon serving a notice of withdrawal on –

the review adjudicator or the panel of review adjudicators, as the case may be;

the authorised nominating body which appointed the review adjudicator or the panel of review adjudicators, as the case may be; and

the other party to the adjudication review application.”. 22 ss 17A and 26 of the Building and Construction Industry Security of Payment Act 1999 (New South Wales): “17A Withdrawal of application

A claimant may withdraw an adjudication application at any time –

before an adjudicator is appointed to determine the application, or

if an adjudicator has been appointed before the application is determined, by serving written notice of the withdrawal on the respondent and on the authorised nominating authority or the adjudicator (if any).

If an adjudicator has been appointed to determine an adjudication application, the withdrawal of the application does not have effect if any other party to the construction contract concerned objects to the withdrawal and, in the opinion of the adjudicator, it is in the interests of justice to uphold the objection.”. 23 … 26 Claimant may make new application in certain circumstances

This section applies if –

a claimant fails to receive an adjudicator’s notice of acceptance of an adjudication application within 4 business days after the application is made, or

an adjudicator who accepts an adjudication application fails to determine the application within the time allowed by section 21(3).

In either of those circumstances, the claimant –

may withdraw the application, by notice in writing served on the adjudicator or authorised nominating authority to whom the application was made, and

may make a new adjudication application under section 17. 24

Despite section 17(3)(c), (d) and (e), a new adjudication application may be made at any time within 5 business days after the claimant becomes entitled to withdraw the previous adjudication application under subsection (2).

This Division applies to a new application referred to in this section in the same way as it applies to an application under section 17.”. s 28 of the Building and Construction Industry Security of Payment Act 2002 (Victoria): “28 Claimant may make new application if previous application refused or not determined

This section applies if –

a claimant fails to receive an adjudicator's notice of acceptance of an adjudication application within 4 business days after the application is made; or 25

an adjudicator who accepts an adjudication application fails to determine the application within the time allowed by section 22(4).

In either of those circumstances, the claimant –

may withdraw the application, by notice in writing served on the adjudicator or the authorised nominating authority to whom the application was made; and

may make a new adjudication application under section 18.

Despite sections 18(3)(c), 18(3)(d) and 18(3)(e), a new adjudication application may be made at any time within 5 business days after the claimant becomes entitled to withdraw the previous adjudication application under subsection (2).

This Division applies to a new application referred to in this section in the same way as it applies to an application under section 18.”. 26 [30] For the Defendant, Mr. V. Ganesalingam’s submission was direct to the point; there is only one adjudication proceeding in relation to the dispute between Plaintiff and the Defendant i.e. Adjudication No. 3158 as no adjudicator was appointed by the AIAC pursuant to the submission of the 1st Payment Claim and no Adjudication Claim was served on the Plaintiff pursuant to sub-s 9(1) CIPAA. Therefore, it was contended that there is no adjudication proceeding for the Defendant to withdraw under sub-s 17(1) CIPAA. [31] In any event, the Defendant relied on the cases of Ranhill E & C Sdn Bhd v. Tioxide (Malaysia) Sdn Bhd & Other Cases [2016] 5 MLRH 472 and Grouteam Pte Ltd v Ues Holdings Pte Ltd [2016] 5 SLR 1011 in submitting that the purpose of statutory adjudication is to do away with procedural technicalities. As such, the adjudication proceedings should not be thwarted by “overly sensitive concern for procedural niceties”. [32] Moreover, pursuant to sub-s 26(1) CIPAA, any non-compliance by the Defendant with the provisions of the CIPAA whether in respect of time 27 limit, form or content shall be treated as an irregularity and shall not invalidate the power of the Adjudicator to adjudicate the dispute nor nullify the adjudication proceedings. It was also argued that, even if there is any irregularity in the procedure adopted by the Defendant, the Plaintiff is not prejudiced as it had submitted and served its Payment Response to the 2nd Payment Claim. - The findings of the Court [33] An unpaid party who wishes to avail himself to statutory adjudication must serve a payment claim on the non-paying party according to the requirements in s 5 CIPAA. Upon being served with a payment claim, the non-paying party may choose to respond to the payment claim by admitting the claim or disputing the same either partly or wholly in a written payment response on the unpaid party within 10 working days of the receipt of the payment claim (see s 6 CIPAA). A non-paying party who fails to respond to a payment claim is deemed to have disputed the entire payment claim (see sub-s 6(4) CIPAA). 28 [34] A dispute is thus crystallised when the claimed amount or any part thereof is not admitted, or it can be reasonably inferred that the claim is disputed by the non-paying party (see Construction Adjudication in Malaysia, Second Edition, Sweet & Maxwell, 2018 by Lam Wai Loon and Ivan Loo at p 161). Sub-s 7(1) CIPAA confers the right on the unpaid party and the non-paying party to refer a payment dispute to adjudication where the dispute must fall within the ambit of the payment claim served by the unpaid party on the non-paying party. Sub-s 7(2) CIPAA goes on to provide that the right to refer a dispute to adjudication shall only be exercised after the expiry of the period to serve a payment response as specified under sub-s 6(3) CIPAA which is 10 working days from the date of receipt of the payment claim. [35] The adjudication proceedings is initiated by the service of the notice of adjudication by the party who refers the dispute to adjudication or known as the “claimant”, on the other party on whom the notice of adjudication is served or referred to as the “respondent” in the CIPAA. 29 Upon receipt by the respondent of the notice of adjudication, an adjudicator shall be appointed (see sub-s 8(1) and (2) CIPAA). [36] However, the problem that was faced by the parties in this case with regards to the 1st Payment Claim and 1st Form 3 is that there was no Director of the AIAC at the material time to appoint the adjudicator to adjudicate the dispute between the parties although the request was made vide Form 5 dated 12.5.2020. This is how Ms. Chelsea Pollard, International Case Counsel of the AIAC explained the situation in her letter dated 21.5.2020 to Synergy Building Solutions Sdn Bhd (‘SBS’) who acted on behalf of the Defendant in the adjudication proceedings (exhibit “TPS-16”, encl. 2): “… It is with great sadness that we announce the passing of our beloved Director Mr. Vinayak P. Pradhan on 8th March 2020. The appointment pf a new Director of the AIAC has yet to be made by the Government of Malaysia. In light of this and given the strict statutory timeline for a Director of the AIAC to appoint an adjudicator pursuant to Construction Industry 30 Payment and Adjudication Act 2012, we will not proceed with the Claimant’s Form 5. Despite the above, we are pleased to advise that the requisite documents have been received to register the above-captioned adjudication proceedings pursuant to the Construction Industry Payment and Adjudication Act 2012. However, please note that pursuant to Rule 2 of the AIAC Adjudication Rules & Procedure which requires service of notice to register on the Director of the AIAC, the registration of the above-captioned proceedings will only take effect upon the appointment of a New Director to the AIAC. A formal letter confirming the registration of these proceedings will be sent in due course following the appointment of a new Director to the AIAC. Should you wish to progress with the matter, we will eventually require a fresh Form 5. Please advise if you would prefer to proceed with the filing of a fresh Form 5 at a later stage, in which case, we will account the present appointment fees towards the future submission of a fresh Form 5. Alternatively, the Claimant’s UOB Cheque No. 183159 for the amount of RM424.00 in respect pf our appointment fee, will be respectively returned to the Claimant for their safekeeping. 31 Please also ensure that for all future exchange of correspondence and service of documents in this matter, please cite the case reference number: AIAC/D/ADJ-3158-

…”. [37] It bears mentioning that the Defendant had enclosed United Overseas Bank (Malaysia) Bhd cheque no. 183158 dated 11.3.2020 in the amount of RM265.00 (‘said Cheque’) as payment for the registration fee for the adjudication reference together with the 1st Form 3A. [38] However, before the new Director of the AIAC took office on 1.12.2020, the Defendant submitted and served the 2nd Payment Claim to the Plaintiff on 16.6.2020. The covering letter from SBS (exhibit “TPS-22” in the Plaintiff’s Affidavit In Reply (‘AIR’), encl. 12) states that: “Further to our earlier letter ref.: … dated 27th February 2020., we write to confirm that Payment Claim Ref.: SYNERGY-TCHC-GDSB-FORM 1 dated 27th February 2020 is now supersede. 32 We hereby served you a revised Payment Claim Ref.: SYNERGY-TCHC-GDSB-FORM 1 (R1) dated 15th June 2020

A claimant may at any time withdraw an adjudication claim by serving a notice of withdrawal in writing on the respondent and the adjudicator.

The claimant shall bear the costs arising out of the withdrawal of the adjudication proceedings unless the adjudicator orders otherwise.

The claimant who has withdrawn the adjudication claim is free to recommence adjudication on the same subject matter by serving a new notice of adjudication in accordance with section 8. …” 36 [47] Section 9 CIPAA provides for the need to serve a written adjudication claim in the following manner: “Adjudication Claim

9.

The claimant shall, within ten working days from the receipt of the acceptance of appointment by the adjudicator under subsection 22(2) or 23(2), serve a written adjudication claim containing the nature and description of the dispute and the remedy sought together with any supporting document on the respondent.

The claimant shall provide the adjudicator with a copy of the adjudication claim together with any supporting document within the time specified under subsection (1).”. Whilst the requirements for an adjudication claim are akin to that of a notice of adjudication, the CIPAA makes a distinction between a notice of adjudication and an adjudication claim. In fact, distinct terminologies are used throughout the CIPAA to denote the payment claim, payment response, notice of adjudication, adjudication claim and so on. 37 [48] The references to the “adjudicator” in s 17 CIPAA show that the withdrawal of an adjudication claim is envisaged would occur after the adjudicator has been appointed. In similar vein, Form 11 in Schedule I to the AIAC Rules proposes that the name of the adjudicator be inserted: “FORM 11 Notice of withdrawal of adjudication claim proceedings (Construction Industry Payment & Adjudication Act 2012, section 17(1)) … NOTICE OF WITHDRAWAL OF ADJUDICATION CLAIM/ PROCEEDINGS (pursuant to section 17(1) of the Construction Industry Payment & Adjudication Act 2012)

In accordance with section 17(1) of the Construction Industry Payment & Adjudication Act 2012, we, the Claimant herein, hereby give notice of withdrawal of our adjudication claim/proceedings against you, the 38 Respondent, concerning [describe the dispute] which was referred to [name of adjudicator] for adjudication.

[Set out the reasons for the withdrawal, and (if the Claimant is of the view that it should not bear the costs arising from the withdrawal, state the reasons)].

[We reserve our right to recommence adjudication on the same (or any part of the) matter in dispute]. …”. Although the Forms in Schedule I to the AIAC Rules are suggested forms only and are intended to highlight the matters and procedures which the parties to a dispute may have to consider when taking each step in the adjudication proceedings, nonetheless the learned drafters of the Forms appear to have understood the withdrawal in sub-s 17(1) CIPAA to mean the withdrawal of an adjudication claim and not of the payment claim or the notice of adjudication since an adjudication claim has to be served by the claimant within 10 working days from the receipt of the acceptance of appointment by the adjudicator. 39 [49] The express words of s 17 CIPAA clearly provide for the withdrawal of an “adjudication claim”. In this case, no Adjudication Claim was served by the Defendant on the Plaintiff in respect of the 1st Payment Claim and the 1st Form 3. Hence, I agree with the Defendant’s submission that the 1st Payment Claim did not crystalise into an Adjudication Claim for s 17 CIPAA to be triggered. [50] In respect of prayer (3) in the O.S., the Plaintiff is unable to indicate any provision in the CIPAA or AIAC Rules which explicitly or by implication –

prohibits the issuance of the 2nd Payment Claim on the factual matrix of this case;

requires the Defendant to withdraw the 1st Payment Claim when it chose not to proceed with that claim beyond the service of the 1st Form 3. The Defendant had informed the Plaintiff from the outset that it intended to replace the 1st Payment Claim and 1st Form 3 with the 2nd Payment Claim and 2nd Form 3. The claims 40 in the 2nd Payment Claim are essentially the same as the claims in the 1st Payment Claim except for –

the increase in the sum claimed for “Unpaid Uncertified Payment for Works Done under Progress Claim No. 14 submitted on 3rd January 2020” from RM873,527.56 to RM931,700.05;

(ii) the reduction in the sum claimed for “Unpaid Uncertified Payment for Variation Order under Progress Claim No. 14 submitted on 3rd January 2020” from RM649,836.99 to RM198,211.91; and

(iii) the addition of a claim for “Unpaid Uncertified Payment for Material On Site under Progress Claim No. 14 submitted on 3rd January 2020” for the sum of RM417,253.92. 41 The Plaintiff was not prejudiced in any way as it was able to submit and serve its Payment Response and Adjudication Response for the 2nd Payment Claim; and

renders the 2nd Payment Claim void and a nullity in the circumstances of the case. [51] The Plaintiff’s Supplementary Submissions 2 dated 8.3.2021 (encl. 22) merely described the facts which the Court had highlighted to counsels on the first hearing date without any analysis as to how these facts give rise to the legal consequences as asserted by the Plaintiff. Coupled with the fact that the Plaintiff waited for roughly 6 months from the date of service of the 2nd Payment Claim and 5½ months from the date of service of the 2nd Form 3 before filing the O.S., I am not convinced that the Plaintiff has established its case for a declaration to be granted in the terms as in prayers (2) and (3) of encl. 1. 42 3rd issue: Whether the JM Application has the effect of taking the dispute between the Plaintiff and the Defendant outside the ambit and jurisdiction of the CIPAA [52] Section 37 CIPAA provides for the relationship between adjudication and other dispute resolution process in these words: “37. (1) A dispute in respect of payment under a construction contract may be referred concurrently to adjudication, arbitration or the court.

Subject to subsection (3), a reference to arbitration or the court in respect of a dispute which is being adjudicated shall not bring the adjudication proceedings to an end nor affect the adjudication proceedings.

An adjudication proceeding is terminated if the dispute being adjudicated is settled by agreement in writing between the parties or decided by arbitration or the court.”. [53] Section 410 of the CA 2016 provides that: 43 “Effect of application for a judicial management order

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.”. 44 [54] The Plaintiff took pains to submit that failure to abide by the above quoted provision may constitute a criminal offence punishable by imprisonment under s 588 of the CA 2016. [55] As submitted by the Defendant, the foundation of the Plaintiff’s contentions that a party who has applied for a judicial management order such as the Defendant could not avail itself to the procedures under the CIPAA can also be found in the Statement pursuant to O. 7, r. 3(1) RoC 2012, in particular paras 2, 3 and 5(a) to (c) in encl. 1. These statements and the rest of the Plaintiff’s arguments can be summarised as follows:

the statutory scheme of the CIPAA is to afford speedy disposal of payment disputes on the basis of temporary finality. Sub-s 37(1) CIPAA allows the parties to concurrently refer the dispute to the courts or arbitration. The Plaintiff needed to bring legal proceedings against the Defendant for its counterclaim in the sum of RM15,453,022.66 in accordance with s 37 CIPAA; 45

the Defendant filed the JM Application to obtain an automatic moratorium against all legal actions 7 days after the filing of the 1st Payment Claim. The Defendant’s action would effectively deprive the Plaintiff of its unfettered and automatic rights to have the dispute concurrently decided by the court or arbitration, or to set aside or stay the adjudication decision; and

to subject the Plaintiff to an additional hurdle to seek leave from the court before any intended litigation and/ or arbitration is against the fundamental concept, and not within the contemplation, of the CIPAA. Moreover, leave of the court is granted only under very special and stringent circumstances. [56] The Defendant retorted that the Plaintiff’s proposition of law on this issue is not supported by any authority whatsoever and is in conflict with – 46

s 37 CIPAA which provides for adjudication proceedings, arbitration and court litigation to proceed concurrently and to not be mutually exclusive; and

the policy of the CIPAA to facilitate regular and timely payment and to provide speedy dispute resolution through adjudication and remedies for the recovery of payment in the construction industry. [57] This, says the Defendant, is accentuated by the fact that the Seremban High Court had, on 20.7.2020, granted leave to the Plaintiff pursuant to s. 410(c) of the CA 2016 to commence arbitration proceedings against the Defendant under the LoA and the Plaintiff has commenced arbitration proceedings against the Defendant pursuant to the leave obtained. [58] To my mind, this issue is not as convoluted as the Plaintiff has made it to be. The answer lies in the Order made by Azman Bin Abdullah J on 20.7.2020 upon the application by the Plaintiff as the proposed 47 intervener and the Defendant as the applicant in the suit at the Seremban High Court (see exhibit “TPS-20” in the Plaintiff’s Affidavit In Support, encl. 2). The relevant part of the said Order is re-produced below with my added emphasis: “ …

The Proposed Intervener be allowed to intervene in the present action and be added as a party in the present action for the purposes of (2) below and to challenge the nomination of the Applicant’s judicial manager.

The Proposed Intervener be granted leave to commence and continue the following legal proceedings against the Applicant for: -

Any dispute or difference arises from and/or in connection with the letter of award dated 8.2.2018 (with the contract documents enclosed) for a project known as … for Messrs Granstep

Breach of a friendly loan agreement dated 19.9.2019; and 48

Any originating application for interim, interlocutory and/or permanent reliefs or declarations necessitated by and/or in connection with the Adjudication Proceedings started by the Applicant, including application to challenge the jurisdiction of the adjudicator or the applicability of the Construction Industry And Payment Adjudication Act 2012 or any application under the same. ...”. [59] Based on para 2(a) of the said Order, the Plaintiff was granted leave to commence and continue legal proceedings against the Defendant in relation to, among others, any dispute or differences arising from and/ or in connection with the LoA for the Project. Proceedings by way of a civil suit in court, an arbitration proceeding and/ or an adjudication proceeding are encapsulated within the meaning of “legal proceedings” (see MRCB Engineering Sdn Bhd v Kuddus Construction Sdn Bhd [2020] MLJU 2094 and KLIA Associates Sdn Bhd & Anor v Mudajaya 49 Corporation Berhad And Another Summons [2020] MLJU 1433 at para 29). [60] Further, I would also read para 2(c) of the said Order to be wide enough to allow the Plaintiff to seek interim, interlocutory and/ or permanent reliefs under the CIPAA in connection with the adjudication proceedings commenced by the Defendant by way of an originating summons. Such reliefs would include an application to set aside an adjudication decision and/ or to stay the enforcement of the same pursuant to ss 15 and 16 CIPAA. [61] Premised on the terms of the said Order, the issue of the Plaintiff being deprived from its rights to have the dispute concurrently decided by the court or arbitration or to make any application pursuant to the CIPAA does not arise at all. In fact, the Plaintiff has sent a Notice of Arbitration dated 1.9.2020 to the Defendant (see the same exhibit “TSL-1”). 50 [62] In the circumstances, there is no valid reason to disentitle the Defendant from pursuing its claim under the CIPAA. The application for a declaration as per prayer (1) of the O.S is absolutely baseless. Conclusion [63] In the upshot, there are no justifiable reasons for the Court to grant the declarations as sought by the Plaintiff. The Plaintiff’s application in encl. 1 was accordingly dismissed with costs of RM5,000.00, subject to allocatur. Dated: 31 January 2022 (ALIZA SULAIMAN) Judge Construction Court 2 High Court Kuala Lumpur 51 Counsels/Solicitors: For the Plaintiff: Richard Kok Chi Wei (Tan Ko Xin with him) Messrs. Rhiza & Richard Advocates & Solicitors M-2-7 & M-3-7, Plaza Damas No. 60, Jalan Sri Hartamas 1 50480 Kuala Lumpur For the Defendant: Ganesalingam Vijayaratnam (Joseph Yeong with him) Messrs. Ganesalingam Vijayaratnam & Aisha Jothilingam Advocates & Solicitors No. 36, Jalan Pasar Baru 71000 Port Dickson Negeri Sembilan Cases: AES Barry Ltd v TXU Europe Energy Trading Ltd (in administration) [2005] 2 BCLC 22 ASM Development (KL) Sdn Bhd v Econpile (M) Sdn Bhd [2021] 8 MLJ 99 Binastra Ablebuild Sdn Bhd v JPS Holdings Sdn Bhd and another case [2018] 8 MLJ 190 52 Broadway Power Sdn Bhd v Eden Construction (M) Sdn Bhd [2020] MLJU 1150 Caledonian Modular Ltd v Mar City Development Ltd [2015] EWHC 1855 (TCC) Chip Hup Hup Kee Construction Pte Ltd v Ssangyong Engineering & Construction Co Ltd [2009] SGHC 237 CIMB Islamic Bank Bhd v Wellcom Communications (NS) Sdn Bhd & Anor [2019] MLJU 148 Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69 Electro Magnetic (S) Ltd (Under Judicial Management) v Development Bank of Singapore Ltd [1994] 1 SLR 734 Euroland & Development Sdn Bhd v Tack Yap Construction (M) Sdn Bhd [2018] MLJU 861 Grouteam Pte Ltd v Ues Holdings Pte Ltd [2016] 5 SLR 1011 Hinckley Singapore Trading Pte Ltd v Sogo Department Stores (S) Pte Ltd [2001] 3 SLR(R) 119 John Holland Pty Ltd v Made Contracting Pty Ltd [2008] NSWSC 374 53 Kasugi Prima Sdn Bhd v Cobrain Holdings Sdn Bhd [2017] MLJU 1953 Keet Gerald Francis Noel John v. Mohd Noor @ Harun bin Abdullah & 2 Ors. [1995] 1 CLJ 293 Kitchen Xchange v Formacon Building Services Pty Ltd [2014] NSWSC 1602 KLIA Associates Sdn Bhd & Anor v Mudajaya Corporation Berhad And Another Summons [2020] MLJU 1433 Leap Modulation Sdn Bhd v PCP Construction Sdn Bhd and another appeal [2019] 1 MLJ 334 Libra Building Construction Pte Ltd v Emergent Engineering Pte Ltd [2015] SGHC 279 Liew Piang Voon v WLT Project Management Sdn Bhd [2020] MLJU 1431 Malaysia Shipyard and Engineering Sdn Bhd v Bank Kerjasama Rakyat Malaysia Bhd [1985] 2 MLJ 359 Martego Sdn Bhd v Arkitek Meor & Chew Sdn Bhd and another appeal [2019] MLJU 742; [2019] 5 MLRA 584 Mega Sasa Sdn Bhd v. Kinta Bakti Sdn Bhd & Ors [2019] MLRHU 1000 54 Melbourne Steel Erectors Pty Ltd v M&I Samaras (No 1) Pty Ltd [2017] VSC 308 MKP Builders Sdn Bhd v. Panzana Enterprise Sdn Bhd [2019] 1 LNS 2068 MRCB Builders Sdn Bhd v. Southern Builders (J) Sdn Bhd [2018] MLJU 1426 MRCB Engineering Sdn Bhd v Kuddus Construction Sdn Bhd [2020] MLJU 2094 Ranhill E & C Sdn Bhd v. Tioxide (Malaysia) Sdn Bhd & Other Cases [2016] 5 MLRH 472 SKS Pavillion Sdn Bhd v. Tasoon Injection Pile Sdn Bhd [2019] 2 CLJ 704 Syarikat Bina Darul Aman Berhad & Anor v Government of Malaysia [2017] MLJU 673 Syarikat TD Sdn Bhd v Jeks Engineering Sdn Bhd and another case [2019] MLJU 1754 Terminal Perintis Sdn Bhd v Tan Ngee Hong Construction Sdn Bhd and another case [2017] MLJU 242 Tune Talk Sdn Bhd v Padda Gurtaj Singh [2020] 3 MLJ 184 55 UDA Holdings Berhad v. Bisraya Construction Sdn Bhd & Anor And Another Appeal [2014] MLRHU 1096; [2014] MLJU 1738 View Esteem Sdn Bhd v Bina Puri Holdings Bhd [2018] 2 MLJ 22 VVO Construction Sdn Bhd v. Bina MYK Sdn Bhd & Another Case [2017] MLRHU 33 WRP Asia Pacific Sdn Bhd v NS Bluescope Lysaght Malaysia Sdn Bhd [2015] 1 LNS 1236 Legislation: Building and Construction Industry Security of Payment Act 1999 (New South Wales), ss 17A & 26 Building and Construction Industry Security of Payment Act 2004 (Singapore), s 20 Building and Construction Industry Security of Payment Act 2002 (Victoria), s 28 Companies Act 2016, ss 405, 410 & 588 56 Construction Industry Payment and Adjudication Act 2012, ss 5, 6, 8, 9, 17, 26, 27 & 37 Housing Grants, Construction and Regeneration Act 1996 (UK) Rules of Court 2012, O. 7, r. 3(1) Other source(s) referred to: Chow Kok Fong, Lim Chong Fong and Oon Chee Kheng, Adjudication of Construction Payment Disputes in Malaysia: Navigating the Construction Industry Payment and Adjudication Act, Lexis Nexis, 2016 Lam Wai Loon and Ivan Loo, Construction Adjudication in Malaysia, Second Edition, Sweet & Maxwell, 2018