Kaj Development Sdn Bhd v Sinohydro Corporation (M) Sdn Bhd (WA-24C-223-11/2020)

(a) KAJ Development Sdn Bhd (‘KAJ’) against Sinohydro Corporation (M) Sdn. Bhd. (‘Sinohydro’) in Originating Summons (‘O.S.’) No. WA-24C-223-11/2020 (‘O.S. No. 223’)

(i) a declaration that the appointment of Mr. James Patrick Monteiro as Adjudicator by the then Acting President of the Asian International Arbitration Centre (‘AIAC’), the late Mr. Vinayak Pradhan, is invalid and thus any proceeding and the Adjudication Decision made on 21.10.2020 (‘AD’) is declared to be void and of no effect;

(b) by KAJ against Sinohydro pursuant to s. 16(1)(a) CIPAA and O. 92 r. 4 RoC 2012 in O.S. No. 223 for orders that the AD is stayed until the disposal of the Setting Aside Application and the disposal of arbitration at the Singapore International Arbitration Centre (‘SIAC’) (‘Stay Application’); and

(c) by Sinohydro against KAJ pursuant to s. 28(1) CIPAA in O.S. No. WA-24C-250-12/2020 (‘O.S. No. 250’) to enforce the AD (‘Enforcement Application’). [2] Having considered the cause papers and the written and oral submissions by the parties, this Court had pronounced the decision that –

(a) the Setting Aside Application is dismissed with cost of RM10,000.00;

(b) the Stay Application is dismissed with cost of RM5,000.00; and

(c) part of the AD is allowed to be enforced i.e. RM205,805,673.05 less RM3,624,943.80 as the Court was satisfied that the total amount that was awarded twice by the Adjudicator is RM3,624,943.80. KAJ was ordered to pay cost of RM5,000.00 to Sinohydro. All orders as to costs are subject to allocatur. [3] KAJ is aggrieved by the above said decision by this Court. I now provide my full grounds for the decision. The Cause Papers [4] The cause papers in respect of each application are set out below: Setting Aside Application

(a) O.S. No. 223 dated 3.11.2020 (encl. 1);

(b) KAJ’s Affidavit In Support (‘AIS’) affirmed by its Director, Yu Ying Ying on 30.10.2020 (encls. 3 - 82);

(c) Sinohydro’s Affidavit In Reply (‘AIR’) affirmed by its Deputy Project Manager, Li Qingqiao on 2.12.2020 (encl. 93);

(d) KAJ’s AIR affirmed by the same deponent on 16.12.2020 (encl. 96);

(e) Sinohydro’s AIR No. 2 affirmed by the same deponent on 30.12.2020 (encl. 98);

(f) KAJ’s AIR No. 2 affirmed by the same deponent on 27.1.2021 (encl. 102); and

(g) Sinohydro’s AIR No. 3 affirmed by its Director, He Feng on 19.2.2021 (encl. 103). Stay Application

(a) KAJ’s Notice of Application dated 12.11.2020 (encl. 83);

(b) KAJ’s AIS affirmed by the same deponent on 12.11.2020 (encls. 84 - 91);

(c) Sinohydro’s AIR affirmed by Li Qingqiao on 2.12.2020 (encl. 94);

(d) KAJ’s AIR affirmed by the same deponent on 16.12.2020 (encl. 97);

(e) Sinohydro’s AIR No. 2 affirmed by the same deponent on 30.12.2020 (encl. 99);

(f) KAJ’s AIR No. 2 affirmed by the same deponent on 27.1.2021 (encls. 101 - 102); and

(g) Sinohydro’s Notice of Intention to use AIR No. 3 (encl. 103) for encls. 1 and 83 on 12.3.2021 (encl. 110). Enforcement Application

(a) O.S. No. 250 dated 29.12.2020 (encl. 1);

(b) Sinohydro’s AIS affirmed by Li Qingqiao on 29.12.2020 (encl. 2);

(c) KAJ’s AIR affirmed by the same deponent on 27.1.2021 (encl. 5); and

(d) Sinohydro’s AIR affirmed by He Feng on 19.2.2021 (encl. 6). Background Facts [5] KAJ is a private limited company incorporated in Malaysia with its business address at No. 1, Jalan Baiduri 2, Taman Pulau Melaka, 75000 Melaka. [6] Sinohydro is also a private limited company incorporated under the laws of Malaysia and having its registered address at 2nd floor, Wisma Naim, 2½ Mile Rock Road, 93200 Kuching, Sarawak and its business address at No. 26-1, Menara 1MK, Kompleks 1 Mont Kiara, No. 1, Jalan Kiara, Mont Kiara, 50480 Kuala Lumpur. [7] By a Letter of Award dated 6.6.2017 (‘LoA’), KAJ has awarded the “Design And Build Contract For The Reclamation And Related Works For (Part Of) 609 Acres Of Land At The Melaka Gateway Project, Melaka, Malaysia” (‘Project’) to the Consortium of Sinohydro Corporation Limited – Sinohydro Corporation (M) Sdn Bhd (‘Consortium’) as contractor for the Project for a contract sum of RM1,343,059,326.13. [8] On 16.8.2017, the parties executed a Contract Agreement in respect of the Project. Clause 2 of the Contract Agreement provides that the LoA, the Letter of Tender dated 24.3.2017 and Appendix to Tender, the Conditions of Contract (‘CoC’), the Employer’s Requirements, the Contractor’s Proposal and Drawings and the Letter of Agreement shall be deemed to form and be read and construed as part of the Contract Agreement (hereinafter collectively referred to as the ‘Contract’). [9] In addition, the parties executed the following documents:

(a) the Security Agreement and Trust Deed, both dated 4.9.2017, in relation to the security for payment of the contract price which was to be provided by KAJ to the Consortium and to repay any and all monies and payments due and owing from KAJ to Sinohydro under the Contract;

(b) the Novation Agreement dated 22.9.2017 between KAJ, Sinohydro and Sinohydro Corporation Limited where Sinohydro Corporation Limited completely and effectively released, discharged and novated all of its rights, titles, entitlements, interest, obligations and liabilities under the Contract to Sinohydro;

(c) a new Security Agreement dated 8.2.2018; and

(d) an Amendment Letter in respect of the LoA and the Amendment Agreement 1 in respect of the CoC, both dated 8.2.2018, following the amendments made in respect of the LoA and the CoC. [10] On 24.10.2018, Sinohydro wrote to KAJ to inform that pursuant to para 3.2(a) and Clause 6.1 of the Amendment Letter, KAJ had undertaken to create and perfect the land charges for Stage 1 within 8 months from 8.2.2018, however KAJ has failed to do the same. Additionally, KAJ had failed to pay the minimum payment as stipulated in the Payment Schedule. Hence, at the meeting held on 18.10.2018, KAJ and the Consortium have mutually agreed for the Consortium to completely suspend all works under the Contract pursuant to para 13 of the LoA and/ or Clause 16.1 of the CoC with effect from 18.10.2018. [11] A Notification of Further Suspension of Works was issued by Sinohydro to KAJ on 1.2.2019 stating, inter alia, that there is no development on the relevant land charge for Stage 1 and the Minimum Payment and that KAJ has unfulfilled its contractual obligations. Sinohydro would therefore continue to suspend all its works until KAJ fully resolve the matters as highlighted. [12] On 15.3.2019, KAJ sent a Notice of Termination pursuant to Clause 15 of the CoC to terminate the Contract with immediate effect on the ground that Sinohydro had wrongfully suspended works, refused to continue with the works and/ or that by Sinohydro’s actions and conduct, it had repudiated the Contract. [13] Subsequently, Sinohydro served a Payment Claim on KAJ pursuant to s 5 of the CIPAA on 18.6.2019 for the total sum of RM230,911,904.03 being monies allegedly due and owing under Interim Payment Certificates Nos. 2 to 18 for the period ending until 31.8.2017 right up to the period ending until 25.12.2018; Interim Payment Applications Nos. 18 and 19 for the period ending until 25.1.2019 and 25.2.2019, respectively; the release of retention sum; Goods and Services Tax (‘GST’); and interest charges on the outstanding certified payments and claimed amount. [14] This was followed by the submission of –

(a) KAJ’s Payment Response dated 2.7.2019 pursuant to s 6 of the CIPAA;

(b) Sinohydro’s Notice of Adjudication dated 13.12.2019;

(c) Sinohydro’s Adjudication Claim dated 12.2.2020;

(d) KAJ’s Adjudication Response dated 4.3.2020; and

(e) Sinohydro’s Adjudication Reply dated 17.3.2020. [15] On 16.7.2019, KAJ had applied to the High Court at Melaka in O.S. No. MA-24NCC(ARB)-2-07/2019 (‘Melaka Suit’) for a declaration that the CIPAA does not apply to the Contract and that Sinohydro had incorrectly commenced or that it is not entitled to commence adjudication proceedings and/ or is restrained from commencing and/ or continuing with adjudication proceedings against KAJ pursuant to the CIPAA and for an injunction to be issued such that the adjudication process be prevented from proceeding. KAJ’s application was dismissed by the High Court on 8.8.2019 and it then lodged an appeal to the Court of Appeal. As at the date of hearing of the Setting Aside Application, KAJ’s appeal was still pending at the Court of Appeal. [16] Meanwhile, the learned Adjudicator delivered the AD on 21.10.2020 and this was subsequently amended on 4.11.2020. The Adjudicator determined that –

(a) KAJ shall pay to Sinohydro the sum of RM205,805,673.05 comprising of –

(i) RM163,252,560.86 Interim Certified Sums;

(v) RM4,180,501.08 Materials on Site;

(b) KAJ’s claims as per its Payment Response and Adjudication Response are rejected and dismissed;

(c) the adjudicated sum shall be paid on or before 11.11.2020 in one lump sum;

(d) KAJ shall pay Sinohydro interest on the adjudicated sum calculated at the rate of 6.88% per annum from 1.6.2019 until full realisation; and

(e) costs of the adjudication proceedings is to be borne by KAJ pursuant to sub-s 18(1) of the CIPAA in the amount of RM60,600.00 and party to party costs in the amount of RM250,000.00. These sums are to be paid by KAJ to Sinohydro on or before 11.11.2020. I. The Setting Aside Application [17] KAJ relied on limbs (b) and (d) under s 15 of the CIPAA in its quest to set aside the AD. The relevant part of the said statutory provision reads as follows: “Improperly Procured Adjudication Decision

An aggrieved party may apply to the High Court to set aside an adjudication decision on one or more of the following grounds: …

(b) there has been a denial of natural justice; …

(d) the adjudicator has acted in excess of his jurisdiction.”. [18] KAJ submitted that the AD ought to be set aside based on the following broad reasons:

(a) the Adjudicator lacks jurisdiction;

(b) the Adjudicator has committed errors in making his decision; and

(c) the AD was not rendered within the agreed time and the Adjudicator did not obtain a new agreed time from the parties to deliver the AD. [19] The specific grounds of challenge raised by KAJ shall be dealt with in the ensuing part of this judgment. 1st Ground: Whether the appointment of the Adjudicator is invalid as the late Mr. Vinayak Pradhan who appointed the Adjudicator was not a Director or Acting Director of the AIAC at the material time [20] In the Setting Aside Application, KAJ sought a declaration that the appointment of the Adjudicator by the “then Acting President” of AIAC is invalid, and thus any proceeding and consequently the AD rendered by the Adjudicator is declared to be void and of no effect. [21] In paras 29 to 34 of KAJ’s AIS (encl. 3), it was affirmed that the late Mr. Vinayak Pradhan was never validly appointed as the Director of the AIAC and at all times he was merely appointed as the Acting Director of the AIAC and his appointment was terminated by the Secretary General of the Asian-African Legal Consultative Organization (‘AALCO’) on 8.5.2019. [22] In this regard, KAJ relied on a copy of the affidavit affirmed by the Secretary General of AALCO on 13.3.2020 which was adduced in the case of Prestij Mega Construction Sdn Bhd v Personal Representative of Estate of Vinayak Pradhan Prabhakar (deceased) & Ors and other cases [2021] 11 MLJ 581 (see exhibit “Y-13”). KAJ further averred that it had raised an objection as to the Adjudicator’s jurisdiction vide a letter dated 1.7.2020 (see exhibit “Y-14”). [23] Sinohydro refuted KAJ’s contentions by arguing that the court in Prestij Mega’s case and in Mega Sasa Sdn Bhd v Kinta Bakti Sdn Bhd & Ors [2020] 10 MLJ 409 have held that the appointments of adjudicators by the late Mr. Vinayak Pradhan during his term as Acting Director or Director of the AIAC to be valid. [24] Ms. S.M. Chan who appeared for KAJ also drew the attention of the Court to the fact that KAJ did not, in its Written Submissions, refer to this ground and thus, KAJ must be taken to have abandoned this issue as a reason to set aside the AD. [25] A perusal of KAJ’s Written Submissions shows that it did not allude to this ground and the prayer for a declaration. Therefore, KAJ has made a conscious decision not to pursue this relief. In any event, this issue has been determined by Lim Chong Fong J in the case of Mega Sasa, supra, at paras 67 to 79 and in particular, the following para: “[73] In challenging the appointment of the third defendant as the director of the AIAC, the plaintiff is effectively inviting this court to adjudicate on the on-going dispute between AALCO and the Government of Malaysia as to whether the procedure, as agreed in article IV of the host country agreement, has been complied with. I am however of the view that it is neither competent nor desirable for this court to do so because by article IX of the host country agreement; the parties are to consult and negotiate to resolve the disputes amicably between themselves without the intervention of any external third body including this court. Besides that, AALCO is also not a party here. It is wrong for this court to make a decision that may bind AALCO which is not a party in these proceedings. In Dato’ Jaffar bin Mohd Ali v Jastera Berhad [1999] MLJU 575; [2000] 8 CLJ 106, Low Hop Bing J (later JCA) held as follows: Our Courts do not function as busy bodies and it has never been the business of our Courts to give an order in favour or against any person or persons who are non-parties or strangers to the case before our Courts. Moreover, it was held in the House of Lords case of Maclaine Watson & Co Ltd v Department of Trade and Industry (and related appeals); Maclaine Watson & Co Ltd v International Tin Council [1990] LRC (Const) 193 that a domestic/municipal court does not have jurisdiction to adjudicate or enforce rights arising out of transactions in an international treaty.”. His Lordship went on to cite s 41 of the Interpretation Acts 1948 and 1967 and the Federal Court decision in All Malayan Estates Staff Union v Rajasegaran & Ors [2006] 6 MLJ 97 before concluding that it is immaterial even if the appointment of the third defendant, the late Mr. Vinayak Pradhan, is challenged by the plaintiff and subsequently invalidated pursuant to article IX of the host country agreement. His Lordship further justified the finding that the plaintiff’s challenge on the appointment of the second defendant (the adjudicator Soh Lieh Seng) by virtue of the purported invalid appointment of the third defendant as Director of the AIAC is unmeritorious on the ground that: “[77] That notwithstanding, it has not been disputed by the plaintiff, based on the correspondences and communications between AALCO and Government of Malaysia tendered in the affidavit evidence before me, that the third defendant is the acting director of the AIAC at the material time he appointed the second defendant as the adjudicator. This has been expressly recognised by the Secretary General of AALCO in his letter dated 10 July 2019 written to the third defendant. I have also ascertained from the parties that the acting directorship of the third defendant has never been expressly revoked or terminated in any way. In other words, the third defendant was then still the acting director, even if he was not the director of the AIAC because of the conflict between AALCO and the Government of Malaysia over his directorship. …”. 2nd Ground: Whether the Adjudicator acted in excess of jurisdiction [26] In grounds (c) and (d) in O.S No. 223., KAJ contended that the Adjudicator acted in excess of his jurisdiction by failing to identify the issues raised by KAJ and by considering and deciding on the wrong issues and thus committed errors of law. These grounds are repeated in KAJ’s AIS (encl. 3) in subparas 36 (xiii) and (xiv) as single statements viz. that “The Adjudicator has considered and decided on the wrong issues.” and “The adjudicator has failed to identify the issues raised by KAJ in the adjudication proceedings.” [27] However, KAJ again did not, in its Written Submissions, refer to these grounds. The Court therefore treats these grounds as having been abandoned by KAJ. [28] Nevertheless, in subpara 14(b) of Sinohydro’s Written Submission, the 17 reasons proffered by KAJ in its averments in para 36 of the AIS in alleging that the Adjudicator acted in excess of his jurisdiction was summarised as follows: “According to KAJ, this is because Sinohydro has expressly/impliedly agreed to exclude the application of the CIPAA in the Contract; that CIPAA does not apply to the Contract because reclamation work is outside the scope of the CIPAA; that Sinohydro is not an unpaid party; that Sinohydro has agreed to accept land property as a guarantee for the work done; that Sinohydro has expressly/impliedly agreed to refer any disputes to Arbitration; that the CIPAA does not apply to the Contract as the Contract has been terminated by KAJ; that the Adjudicator has failed to take into account the fact that Sinohydro has agreed to carry out the joint survey of the project site; that the Adjudicator has decided that the termination of the Contract by KAJ against Sinohydro is unlawful whereby the Adjudicator himself has no jurisdiction to decide on the validity of the Contract which is the subject of arbitration proceedings; that the Adjudicator has ruled that the termination is unlawful and further decided that the retention sum of RM8,592,240.05 must be released to Sinohydro; that the Adjudicator has erred in relying on a survey by Khoo Surveyor dated 30.10.2018; that the Adjudicator had failed to consider the correct evidence; that the Adjudicator has considered and decided on the wrong issues; that the Adjudicator has failed to identify the issues raised by KAJ in the adjudication proceedings; that the Adjudicator has made a wrong and unreasonable decision by ordering KAJ to pay the Adjudicated Amount in one lump sum on or before

11.11.2020; and that the Adjudicator has made a wrong and unreasonable decision by ordering KAJ to make payment for the cost amounting to RM310,600.00.”. [29] As rightly pointed out by Ms. S.M. Chan, KAJ appears to have departed from the above quoted grounds upon which O.S. 223 was made in its Written Submissions as the arguments in the latter are largely not based on the averments in KAJ’s affidavits. In this situation, KAJ’s arguments in the Written Submissions tantamount to statements from the Bar. It is trite that statements from the Bar is not evidence and must therefore be disregarded (see Minister of Labour, Malaysia v Chan Meng Yuen and another appeal [1992] 2 MLJ 337, Ng Hee Thoong & Anor v Public Bank Berhad [1995] 1 MLJ 281 and Lie Kok Keong v Tang Container & Services Sdn Bhd [2004] 1 MLJ 373). [30] In any event, Sinohydro’s counsel had also correctly submitted that, in essence, KAJ’s complaints in the AIS that the Adjudicator had acted in excess of his jurisdiction are nothing more than KAJ’s expression of unhappiness that the AD was not decided in KAJ’s favour. It is well established that the objective which underlies the CIPAA and the statutory scheme requires the courts to respect and enforce the adjudicator’s decision unless it is plain that the question which he had decided was not the question referred to him or the manner in which he has gone about his task is obviously unfair. It is only in rare circumstances that the courts will interfere with the decision of an adjudicator and an error of fact and/ or law will not invalidate the adjudicator’s decision. An adjudication decision is binding if the adjudicator has answered the right question in the wrong way; it is only if he has answered the wrong question that his decision will be a nullity (see ACFM Engineering & Construction Sdn Bhd v Esstar Vision Sdn Bhd and another appeal [2016] MLJU 1776 (CA), ACFM Engineering & Construction Sdn Bhd v Esstar Vision Sdn Bhd and another appeal [2015] MLJU 1951 (HC) and Econpile (M) Sdn Bhd v IRDK Ventures Sdn Bhd and another case [2017] 7 MLJ 732). [31] Ms. S.M. Chan additionally submitted the fundamental legal principles relating to applications under s 15 of the CIPAA, namely that, the statute has provided limited grounds on which the decision of an adjudicator may be set aside, such applications are not an appeal and the decision of the adjudicator, which is interim in nature and of temporary finality, cannot be reviewed on merits. It is thus immaterial if the Adjudicator had erred in his findings of facts and/ law and in the resulting decision (see among others, Bina Puri Construction Sdn Bhd v. Hing Nyit Enterprise Sdn Bhd [2015] 8 CLJ 728). - Whether the Adjudicator lacked jurisdiction or acted in excess of jurisdiction as –

(i) the primary works undertaken by Sinohydro are not “construction work”; and

(a) any building, erection, edifice, structure, wall, fence or chimney, whether constructed wholly or partly above or below ground level;

(b) any road, harbour works, railway, cableway, canal or aerodrome;

(c) any drainage, irrigation or river control work;

(d) any electrical, mechanical, water, gas, oil, petrochemical or telecommunication work; or

(e) any bridge, viaduct, dam, reservoir, earthworks, pipeline, sewer, aqueduct, culvert, drive, shaft, tunnel or reclamation work, and includes—

(A) any work which forms an integral part of, or are preparatory to or temporary for the works described in paragraphs (a) to (e), including site clearance, soil investigation and improvement, earth-moving, excavation, laying of foundation, site restoration and landscaping; and

(B) procurement of construction materials, equipment or workers, as necessarily required for any works described in paragraphs (a) to (e); “construction work contract” means a contract to carry out construction work; … “payment” means a party who has contracted with and is liable to make payment to another party where that other party has in turn contracted with and is liable to make payment to a further person in a chain of construction contracts; … “unpaid party” means a party who claims payment of a sum which has not been paid in whole or in part under a construction contract; …”. [37] Ms. Verene Tan submitted for KAJ that –

(a) the works undertaken by Sinohydro were solely reclamation works and not “construction work” which do not fall within the ambit of the CIPAA; and

(b) the Security Agreement was a form of security given by KAJ to Sinohydro for any monies that is due and owing to Sinohydro as it was agreed that KAJ shall provide land securities to Sinohydro for the sum of RM724,586,444.00 as assurance for payment in respect of the works carried out by Sinohydro. Therefore, the CIPAA does not apply to the Contract as Sinohydro has adequate securities for payment and cannot claim to be an “unpaid party” under s 4 CIPAA. [38] Sinohydro’s response was simply that the foregoing issues have been ventilated by KAJ in the Melaka Suit and KAJ is not at liberty to re-ventilate the same issues before this Court as the issues are res judicata. Sinohydro relied on the oft quoted case of Asia Commercial Finance (M) Bhd v Kawal Teliti Sdn Bhd [1995] 3 MLJ 189 to support its submission. A copy of the Order of the High Court and the Grounds of Judgment were shown in exhibit “LQQ-2”, encl. 93. [39] I have considered the parties’ submissions and I find that, apart from the application of the doctrine of res judicata to the instant case, KAJ’s contentions are completely baseless because –

(a) reclamation work is included in the interpretation of the words “construction work”. In para 36 of the AD, the Adjudicator said: “I am satisfied that I do have jurisdiction to deal with this dispute as the Contract documents in this Adjudication tantamount to a “construction contract” within the meaning of Section 4 of CIPA Act 2020. Further, “reclamation work” is expressly identified in the interpretation section of “construction work” under the said Section 4. I also find support in the Malacca High Court’s findings in Originating Summons Suit No. MA-24NCC(Arb)-2-07/2019, that the Claimant herein is an “unpaid party” within the meaning and ambit of the CIPA Act 2012. Further still, these reclamation works clearly form an integral part of what will become the Melaka Gateway Project. That is to say, without these works, there would be no Melaka Gateway Project. Accordingly, I find that the Respondent’s position that CIPA Act 2012 does not apply to reclamation works is misconceived.”; and

(b) the Adjudicator had analysed KAJ’s allegation on the meaning of “unpaid party” and correctly concluded that: “50.2 I have perused the Contract Documents, the various financing agreements and performance security documents in this matter and find that no where in any of these documents does the Respondent’s purportedly performance security overrides the obligation of the Respondent to make payment for work done under Clause 14.7 of the Condition of Contract or limit the claim for such payment in the event of default against the performance security only. The performance security in this matter is merely a form of general security, wherein the beneficiary of the performance security may seek payment vide the said security or any other mode of recovery under Malaysian law.

50.3 Further, it is patently clear that the so called performance security vide charges on the land offered by the Respondent has not been perfected. This has clearly been recognised by the Respondent in its own letter dated

7.11.2018, specifically at paragraphs 2(a)(ii) and 5.

50.4 Further still, I am of the view that the lodgement of the Statement of Particulars with the SSM/CCM does not tantamount to perfecting a charge on land and the Respondent’s raising this in its Adjudication Response is merely a ‘red herring’.

50.5 Accordingly, I find that the Respondent’s allegation that the Claimant is not an unpaid party within the ambit of Section 4 of CIPA Act 2012 to be without any merit and unsustainable.”. 3rd Ground: Whether the AD is void as it was not rendered within the time as stipulated under the CIPAA [40] Sub-s 12(2) and (3) of the CIPAA read as follows: “…

(a) forty-five working days from the service of the adjudication response or reply to the adjudication response, whichever is later;

(b) forty-five working days from the expiry of the period prescribed for the service of the adjudication response if no adjudication response is received; or

(c) such further time as agreed to by the parties.

(a) KAJ asserted that pursuant to para 12(2)(a) CIPAA, the Adjudicator shall deliver his decision 45 working days from the service of the adjudication reply i.e. on 27.5.2020, however, on 28.4.2020, the Adjudicator sought the agreement of the parties for him to deliver his decision 14 days after the hearing on 5.6.2020.

(b) In para 15 of its AIR (encl. 83), Sinohydro had replied to KAJ’s allegations that (i) KAJ had not been accorded sufficient time to present its case at the adjudication proceedings; (ii) the Adjudicator had pressured the Plaintiff to fix a hearing date; (iii) the Adjudicator had shown bias; (iv) the Adjudicator had refused reasonable request for adjournments; and (v) the Adjudicator did not conduct vice voce hearing by tabulating the Chronology of Events starting with the Adjudicator’s acceptance of his appointment on 30.1.2020 and ending with the Adjudicator amending the AD to correct typographical and computational errors on 4.11.2020. Copies of the relevant correspondence between the parties and the Adjudicator can be seen in exhibit “LQQ-3”. KAJ had the opportunity to make specific denial or rebuttal to Sinohydro’s averments and exhibit by presenting its version of the facts when KAJ affirmed the AIR in encls. 96 and 102 but it did not do so. Instead, KAJ chose to make the general statement that “… the fact that this affidavit does not specifically respond to each and every allegation in the Defendant’s AIR is not to be deemed as an admission of her averments.”. In the circumstances, Sinohydro has proven, on a balance of probabilities, that the chronology of events during the adjudication proceedings is as narrated in encl. 83. This narration does not support KAJ’s contention that its agreement, through Messrs. Harold & Lam was confined to the AD being delivered 14 days from the hearing date of 5.6.2020; that the agreement has expired 14 days after 5.6.2020; and that since the hearing was adjourned to 7.10.2020, a fresh agreement from the parties ought to have been requested by the Adjudicator pursuant to para 12(2)(c) of the CIPAA.

(c) KAJ’s submission from the Bar that KAJ’s agreement has expired 14 days after 5.6.2020 is inconsistent with the evidence produced in exhibit “LQQ-3” whereby –

(i) KAJ had, vide the e-mail to the Adjudicator dated 31.3.2020, requested to submit its Response to Sinohydro’s Adjudication Reply to respond to five issues raised in the Adjudication Reply and proposed that an oral hearing be conducted for the experts’ evidence. The Adjudicator, having invited and obtained Sinohydro’s response to this request, basically allowed KAJ’s application;

(v) KAJ’s new representative, Messrs. Bell & Lee wrote a letter to the Adjudicator dated 1.7.2020 that it had been informed by the client “… that new dates are to be fixed for the purpose of the hearing.”. The letter goes on to place KAJ’s challenge to the Adjudicator’s jurisdiction to proceed to hear and to adjudicate the dispute between the parties on record for the reason that the Adjudicator’s appointment by the late Mr. Vinayak Pradhan is void and of no effect. The letter did not mention any objection to the continuation of the adjudication proceedings on the ground that time for delivery of the decision had expired;

The Experts do not take issue with the approved Provisional Sum. Accordingly, the Claimant is entitled to this amount of RM3,192,570.99. Total Approved Variations (RM1,057,442.67)

I am satisfied that the Claimant is entitled to the approved variations in the amount of RM1,057,442.67.” (see too, para 55 of the AD on the “Adjudicated Amount”). [50] The Approved Provisional Sum and the Approved Variations certified in KAJ’s Interim Payment Certificate (‘IPC’) No. 18 dated 14.2.2019 is RM3,192,565.68 and RM432,378.12, respectively. These amounts also appear in Sinohydro’s Interim Payment Application (‘IPA’) No. 19 for the period from 26.1.2019 to 25.2.2019 as “Previous Accumulated”. The total of RM3,192,565.68 and RM432,378.12 is RM3,624,943.80. [51] IPC No. 18 is re-produced below for ease of reference: Item Description Previous Accumulated Current Workdone Total Accumulated 1.0. Advance Payment 40,210,608.81 75.38 40,210,684.19 2.0. Workdone 167,962,049.11 257,808.00 168,219,857.11 2.1. Accepted Contract Amount 2.2. Approved Provisional Sum 3,192,565.68 3,192,565.68 2.3. Approved Variations 433,131.85 (753.73) 432,378.12 2.4. Add, Value of the Works Executed 171,587,746.64 257,054.27 171,844,800.91 3.0. Less, Retention Money 8,579,387.33 12,852.72 8,592,240.05

4.0. Less, The Employer’s Claim

5.0. Total Certified (excluding GST) 203,218,988.12 244,276.93 203,463,245.05 6.0. Goods and Service Tax (GST)* 7,966,230.43 7,966,230.43 7.0. Total Certified (including GST)* 211,185,198.55 244,276.93 211,429,475.48 8.0. Less, Withholdings – Payment to Nominated Suppliers 7,484,281.55 103,371.69 7,587,653.24 9.0. Total Net Certified (including GST)* 203,700,917.00 140,905.24 203,841,822.24 [52] In paras 37 to 39 of the AD, the Adjudicator had determined that: “Interim Payment Certificates No. 2 to 18

I have perused the 17 Payment Certificates that are part of the Claimant’s claims and find that they are in order and have been issued in accordance with the Contract, in particular Clauses 14.3 and 14.6 of the Conditions of Contract.

Further, I find no contemporaneous documents that challenge the validity of these Interim Payment Certificates.

Therefore, on the face of these Certificates, the Respondent is obliged to pay to the Claimant the sums so certified in the amount of RM163,252,560.86 (Paragraph 29 of the Adjudication Claim) with contractual interest.”. [53] Ms. Verene Tan had rightly submitted that –

(a) the amount in the “Add, Value of the Works Executed” is the added sum of “Accepted Contract Amount”, “Approved Provisional Sum” and “Approved Variations”; and

(b) the Interim Certified Sums of RM163,252,560.86 awarded by the Adjudicator is the amount in the total accumulated “Add, Value of the Works Executed” less the sum in total accumulated “Less, Retention Money” (RM171,844,800.91 less RM8,592,240.05). [54] The learned counsel continued to submit that the Interim Certified Sums awarded by the Adjudicator already included the Approved Provisional Sum and the Approved Variations which totals to RM4,250,013.66 (RM3,192,570.99 + RM1,057,442.67) and that the Adjudicator had allowed Sinohydro’s claims for the 17 IPC and dismissed the claims for IPA No. 18 and 19 (see para 44 of the AD), hence, the sums forming part of these two IPA should not be included in the Adjudicated Amount. It was strenuously argued that in awarding the sum of RM4,250,013.66 over and above the Interim Certified Sums, Sinohydro is unjustly enriched and KAJ is severely prejudiced by the AD. [55] I have given careful consideration to the oral and written submissions by the learned counsels representing the parties, including the clarification on the Reply Submissions and I am satisfied that Sinohydro’s contentions reflect the correct account as to the computations. [56] According to Sinohydro, the balance of the Approved Variations amounting to RM625,064.55 (RM1,057,442.67 less RM432,378.12) which it had claimed in IPA No. 18 and 19 was not awarded twice and ought not be disturbed. This is because the Adjudicator had only dismissed Sinohydro’s claim for RM30,967,539.14 in IPA No. 18 and 19 which is Item 2(e) in Table B, para 26 of the Adjudication Claim (Table B was reproduced in para 23 of the AD). [57] In dealing with “Interim Payment Applications No. 18 and 19/Total Contractor’s Claim (RM30,967,539.14)” in para 44 of the AD, the Adjudicator had considered the arguments and examined the documents pertaining to the same according to three categories viz. Additional “Preliminaries”, “Delay Related Claims” and “Under-certification and/or Non-certification” and concluded as follows: “I did at the hearing on 7.10.2020 seek an update from both Parties with regard to the status of the final submission to the ER to enable him to carry out his duty to determine the value of Works post termination. I was surprised to learn that neither party made a final account submission to the ER. Based on the reasons set out above I am dismissing the claims under Application for Interim Payment No. 18 and 19 respectively, as claimed under item 2(e) in Table B, Paragraph 26 of the Adjudication Claim (for ease of convenience the table has been reproduced in Paragraph 19 above).” (emphasis added). [58] Based on my reading of the AD, the Adjudicator had only dismissed Item 2(e) in Table B in the Adjudication Claim which is the “Total Contractor’s Claim” of RM30,967,539.14 (see too, the “Particulars of Claim” at p 5 of the Payment Claim) and not the entire IPA No. 19 as is KAJ’s interpretation. This means that the total amount that was awarded twice by the Adjudicator is RM3,624,943.80. This error, in my view, does not amount to a denial of natural justice under s 15(b) of the CIPAA as there is no evidence to show that the Adjudicator had failed to accord procedural fairness to KAJ or that KAJ was denied an opportunity of presenting its case in the adjudication proceedings (see the guidelines laid down in Cantillon Ltd v Urvasco Ltd [2008] EWHC 282 (TCC) and applied in a long line of Malaysian cases including by this Court in Samado Sdn Bhd v Kerajaan Malaysia [2020] MLJU 274 and Hiform (M) Sdn Bhd v. TSR Bina Sdn Bhd [2020] 1 LNS 753). [59] For the reasons which shall be elaborated in relation to the Enforcement Application, I am of the opinion that this is an appropriate case for the Court to exercise the discretion to allow the enforcement of part of the AD i.e. RM205,805,673.05 less RM3,624,943.80

(a) an application to set aside the adjudication decision under section 15 has been made; or

(b) the subject matter of the adjudication decision is pending final determination by arbitration or the court.

28.