Kining Exeton Sdn Bhd v Majlis Perbandaran Kuantan (WA-24C-173-12/2016)

OS 173: Originating Summon by Kining Exeton Sdn Bhd (“KESB”) to enforce the adjudication decision dated 23.03.2016 (“CIPAA Decision 1”) as if it is a judgment or order of the High Court pursuant to section 28 of the Construction Industry Payment and Adjudication Act 2012 (“CIPAA 2012”);

OS 174: Originating Summon by KESB to enforce the adjudication decision dated 24.11.2016 (“CIPAA Decision 2”) as if it is a judgment of the High Court pursuant to section 28 of the CIPAA 2012;

OS 18: Originating Summon by Majlis Perbandaran Kuantan (“MPK”) to set aside the CIPAA Decision 2 pursuant to section 15(1)(d) of the CIPAA 2012; and 7

OS 23: Originating Summon by MPK to set aside the CIPAA Decision 1 pursuant to section 15(1)(d) of the CIPAA

[2] By consent of the parties, all the four (4) Originating Summonses were heard together for if the applications for setting aside the CIPAA Decisions are dismissed then this Court would correspondingly grant an order to enforce the same CIPAA Decisions. [3] The parties shall be referred to as they were in the Adjudication as Claimant and Respondent or as KESB and MPK respectively. Project [4]

Interests on late payment of the interim certificates 324,623.58 Nil

Exterior Finishes - Costs for variation or additional works 3,480,000.00 Nil 9

Underfloor PVC Trunking and Related Works - Costs for variation or additional works 1,067,210.00 942,374.00

Hi Tensile Roof Trussses (Multipurpose Hall) and Super Structural Beam (Main Office) - Costs for variation or additional works 1,150,770.80 927,290.84

Extra Over Any Temporary Work By Other Means for the Excavation Works In Lieu Of Sheet Piles - Costs for variation or additional works 1,496,273.20 Nil Total: 7,518,877.58 1,869,664.84 [10] CIPAA 1 proceeded without a need for an oral hearing. During the course of the proceedings the Adjudicator had sought written clarification from the parties in respect of the submissions made by the parties. [11] On 23.3.2016, after considering the relevant facts, documents and contentions, the Adjudicator delivered his findings on the claim brought by KESB and decided amongst others, see CBP(1):p 55, that: The MPK is to pay KESB the sum of RM1,869,664.84 as variations pursuant to clause 24.0 [Variations] of the Contract within 10 working days after receiving the Adjudication Decision; 10 That MPK is to pay the KESB interest at the rate of 5% per annum on the sum of RM1,869,664.84 from the date of the Adjudication Decision until full realisation; and That MPK is to bear the costs of the Adjudication Proceedings amounting to RM38,584.00 and that MPK is to settle the sum of RM38,540.00 within 10 working days after receiving the Adjudication Decision. [12] On 11.4.2016, KESB had through its solicitors, demanded from MPK to pay for the sum awarded in the said the CIPAA Decision

CIPAA Decision 2 [13] KESB brought another claim vide adjudication reference: KLRCA/D/ADJ-0341-2016 against MPK under the CIPAA for a sum, inter alia, the costs for variations and additional works amounted to RM7,933,904.60 (“CIPAA 2”), see CBP(1):pp 187-189. [14] By agreement between the parties, the same Adjudicator was subsequently appointed to act as the adjudicator in CIPAA 2. [15] The particulars of KESB’s claim under CIPAA 2 and the amount later allowed by the Adjudicator are particularized as follows, see CBP(1):pp 199-220: 11 Claim Item Particulars Amount Claimed

Exterior Finishes – costs for variation and additional works 3,480,000.00 1,397,510.00

Boxing Up with Aluminium Cladding for Super Structure, Multipurpose Hall and Related Works - Costs for variation/ additional works. 2,356,880.00 2,356,880.00

Rear Curve Feature Steel Structure complete with Aluminium Composite Panel - Costs for variation/additional works. 236,100.60 111,100.60

Backing Brickwall and Screed For Aluminium Composite Panel - Costs for variation/additional works. 264,368.00 264,368.00

Internal Walls - Costs for variation/ additional works. 511,056.00 511,056.00

Fire Safe Rockwool Behind Fixed Glass Panel In Curtain Wall - Costs for variation/additional works. 1,085,500.00 1,085,500.00 Total: 7,933,904.60 5,726,414.60 [16] Similarly, CIPAA 2 also proceeded without a need for an oral hearing. During the course of the proceedings the Adjudicator had 12 sought written clarification from the parties in respect of the submissions made by the parties. [17] On 24.11.2016, after considering the relevant facts, documents and contentions, the Adjudicator delivered his findings on the claim brought by KESB and decided amongst others, see CBP(1):pp 133-186, that: MPK is to pay KESB the sum of RM5,726,414.60 as variations pursuant to clause 24.0 [Variations] of the Contract within 10 working days after receiving the Adjudication Decision; That MPK is to pay KESB interest at the rate of 5% per annum on the sum of RM5,726,414.60 from the date of the Adjudication Decision until full realization; and That MPK is to bear the costs of the adjudication proceedings amounting to RM63,865.00 and that the MPK is to settle the sum of RM63,865.00 within 10 working days after receiving the Adjudication Decision. [18] On 19.12.2016, KESB had through its solicitors, demanded from MPK to pay for the sum awarded in the said CIPAA Decision

13 Prayers [19] As MPK had failed to make payments pursuant to CIPAA Decision 1 and CIPAA Decision 2, KESB proceeded on 29.12.2016, to file the said OS 173 and OS 174 to enforce the CIPAA Decisions 1 and 2 respectively pursuant to section 28 of the CIPAA 2012. [20] On 31.1.2017, MPK filed the said OS 18 to set aside CIPAA Decision 2 pursuant to section 15(1)(d) of the CIPAA 2012. [21] On 14.2.2017, MPK filed the said OS 23 to set aside CIPAA Decision 1 pursuant to section 15(1)(d) of CIPAA 2012. Principles [22] Under the CIPAA 2012, an Adjudication Decision can only be set aside on limited grounds. Section 15(1) of the CIPAA 2012 provides: “15 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:

the adjudication decision was improperly procured through fraud or bribery;

there has been a denial of natural justice; 14

the adjudicator has not acted independently or impartially; or

the adjudicator has acted in excess of his jurisdiction” (emphasis added) [23] Learned counsel for KESB had cited the dicta of the Court of Appeal in Syarikat Kenderaan Melayu Kelantan v Transport Workers’ Union [1995] 2 MLJ 317 on the meaning on “excess of jurisdiction” where the Court of Appeal held at p 342: “In my judgment, the true principle may be stated as follows. An inferior tribunal or other decision-making authority, whether exercising a quasi-judicial function or purely an administrative function, has no jurisdiction to commit an error of law. Henceforth, it is no longer of concern whether the error of law is jurisdictional or not. If an inferior tribunal or other public decision-taker does make such an error, then he exceeds his jurisdiction. So too is jurisdiction exceeded, where resort is had to an unfair procedure (see Raja Abdul Malek Muzaffar Shah bin Raja Shahruzzaman v Setiausaha Suruhanjaya Pasukan Polis [1995] 1 MLJ 308), or where the decision reached is unreasonable, in the sense that no reasonable tribunal similarly circumstanced would have arrived at the impugned decision. 15 It is neither feasible nor desirable to attempt an exhaustive definition of what amounts to an error of law, for the categories of such an error are not closed. But it may be safely said that an error of law would be disclosed if the decision-maker asks himself the wrong question or takes into account irrelevant considerations or omits to take into account relevant considerations (what may be conveniently termed an Anisminic error) or if he misconstrues the terms of any relevant statute, or misapplies or misstates a principle of the general law.” [24] As the method of setting aside an Adjudication Decision under the CIPAA 2012 is not by way of a judicial review application as in administrative law, it might be prudent to avoid the language of administrative law lest one be found to be applying the wrong test where the setting aside of an Adjudication Decision is concerned. In this regard, the recent dicta of the Federal Court in View Esteem Sdn Bhd v Bina Puri Holdings Bhd [2017] 1 LNS 1378 is most enlightening. The question of law posed for the Federal Court to answer was: “(1) Whether a jurisdictional challenge as to the application of the Construction Industry Payment and Adjudication Act 2012 [“CIPAA”] can be made any time by way of application or whether 16 such an application can only be made upon the application to set aside an Adjudication Award under section 15 of the CIPAA.” [25] His Lordship Zulkefli bin Ahmad Makinudin PCA expounded the position of the law as follows: “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 CIPAA applies but the adjudicator acting under CIPAA had exceeded his jurisdiction. Section 15 of CIPAA relates to the latter. Section 15 is predicated on CIPAA applying to the case and to an adjudication decision made under 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 CIPAA in the first place.

Learned counsel for the respondent contended that a section 15 of CIPAA challenge can only be made after an Adjudication decision is given. There are no provisions in CIPAA which allow a party to seek court intervention in the midst of adjudication.

Learned counsel for the respondent fortified his argument that a section 15 of CIPAA challenge can only be made after an 17 Adjudicator’s decision is given by making reference to section 27 of CIPAA as follows:

Section 27(1) of CIPAA limits the jurisdiction of the adjudicator to matters raised in the Payment Claim and Payment Response, pursuant to sections 5 and 6 of CIPAA respectively. Section 27(2) of CIPAA allows for that jurisdiction to be extended by agreement of the parties.

Section 27(3) of CIPAA gives the adjudicator a discretion to proceed with the adjudication even where a jurisdictional challenge has been raised, but preserves the right of the parties to apply to set aside the Adjudication Decision under section 15 of CIPAA or to oppose the enforcement of that Adjudication Decision.

We are of the view in substance, the “jurisdiction” spoken of in section 15(d) of CIPAA are in circumstances where CIPAA applies and where there is a dispute if the adjudicator has kept himself within his jurisdiction. Thus, by section 27(2) of CIPAA the parties may by consent extend the jurisdiction of the adjudicator to decide on matters outside the claim on which he first acquired jurisdiction. This is possible only if 18 the term “jurisdiction” is used in the sense of CIPAA being applicable in the first place.

The term “jurisdiction” under CIPAA is not used in the administrative or public law sense but in relation to matters within the scope of CIPAA. On this point, in Terminal Perintis Sdn. Bhd. v Tan Ngee Hong Construction Sdn. Bhd. & Anor [2017] MLJU 242, Lee Swee Seng J. observed as follows (at [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 section 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 section 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 section 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 19 proceeding and completing the Adjudication without prejudice to the rights of any party to set it aside under section 15 or to oppose its enforcement under section 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…”

The learned judge also made note of the various types of jurisdictional complaints within CIPAA which may be categorized as core jurisdiction, competence jurisdiction and contingent jurisdiction. The common feature in all of them is the presupposition that CIPAA applies to determine if the adjudicator had kept within his jurisdiction.

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 recognize that the jurisdictional complaint in the present case is that CIPAA did not apply at all because of section 41, and not an “excess of jurisdiction” under section 15, on the basis that CIPAA applied. It is what is termed as an absolute lack of jurisdiction that may be taken up at any time. On this point, the Singapore High Court case of Chip Hup Hup Kee Construction 20 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 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.”

It is our considered view that the appellant had rightly not invoked section 15 of 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 21 circumstances, our answer to Question 1 posed in this appeal is in the positive in the first part and negative in the second part.” (emphasis added) [26] Even though no Payment Response was served by the Respondent MPK, the Adjudicator had nevertheless in making his Decision in the 2 Adjudications considered also the matters raised in the Adjudication Claim, Adjudication Response and Adjudication Reply. Whether the Adjudicator had acted in excess of his jurisdiction in holding that the claims for variation works were validly made in CIPAA Decisions 1 and 2 [27] It was MPK’s contention that the Adjudicator in allowing KESB’s claims in CIPAA Decisions 1 and 2 for variation works, had acted in excess of his jurisdiction simply because that there are no variation orders issued by the Superintending Officer of the Project. [28] MPK’s complaints concerned the following heads of KESB’s claims: In respect of CIPAA Decision 1 22

Underfloor PVC Trunking and Related Works - Costs for variation or additional works 1,067,210.00 942,374.00

Hi Tensile Roof Trussses (Multipurpose Hall) and Super Structural Beam (Main Office) - Costs for variation or additional works 1,150,770.80 927,290.84 [29] In CIPAA 1, KESB’s had made five (5) payment claims against MPK, but in the CIPAA Decision 1, the Adjudicator only partially allowed Claim Nos. 3 and 4, which are set out in the Table above. [30] MPK’s application to set aside CIPAA Decision 1 under the ground that the Adjudicator had acted in excess of his jurisdiction is as follows as set out in MPK’s submissions filed:

The Adjudicator failed to apply the express terms of the Contract.

Section 4 or the Act defines "payment" as being "a payment for works done or services rendered under the express terms of a construction contract." This means that a contractor cannot seek payment for works not done under the express terms of the contract.

KESB’s Payment Claims No. 3 and 4 in CIPAA 1 are alleged to be a variation to the original contract. In the Contract, variations are governed exclusively by Clauses 24 and 25 of the Conditions of Contract.

Clauses 24 and 25 of the Conditions of Contract envisage variations as instructed by the Superintending Officer ("S.O.") only, in the form of a Variation Order. Since Clause 24 expressly provides "Upon the issuance of such Variation Order, the contractor shall forthwith comply with the Variation Order issued by the S.O." it necessarily follows that a Variation Order is an express prerequisite to variation/additional work; an employer will only be bound to pay for variation/additional work carried out pursuant to a Variation Order; and the contractor can only claim for such unpaid sums arising from variation/additional work carried pursuant to a Variation Order.

There was no evidence of any letter or request from KESB to the S.O. for a Variation Order to be issued in respect of the works under Claim No. 1. Had there been and had the S.O. concurred with KESB that there was a variation to change the original contract specification, he would have then issued his instruction in 24 the Form of Variation Order envisaged by Clauses 24 and 25 of the Conditions of Contract.

In this case, there was no instruction from the S.O. requiring a Variation in the form of a Variation Order and no Variation Order issued by the S.O. Letters or Minutes of Meetings cannot be accepted in lieu of or as a valid or acceptable substitute of a Variation Order issued under Clause 24 of the Conditions of Contract. Consequently, there was no variation and KESB was not entitled to alleged or claim a variation.

This Claim No. 3 revolves around the allegation that the original drawings did not contain any routings for electrical, ICT and/or telephone date underfloor trunking system, and that MPK had agreed to a "a positive" variation order at a meeting on 27.2.2013.

If this were truly the case, then KESB should have invoked Clause 8.2 of the Conditions of Contract to "immediately give to the S.O. a written notice specifying the discrepancy or divergence" that would have enabled the S.O. to "issue instructions in regard thereto". That instruction would have constituted a Variation Order. However, this course was never taken and there was no Variation Order.

As for the allegation that a "positive variation order" was agreed at a Meeting on 27.2.2013, the Conditions of Contract only provide for a Variation Order issued by the S.O., of which there was none. Letters or Minutes of Meetings cannot substitute or replace a Variation Order issued by the S.O.

The correspondences adduced by KESB also do not prove any agreement or consensus that the parties had even agreed at the Meeting on 27.2.2013 that the work was additional/variations to the contract works:

The Minutes of the Meeting do not show any such agreement.

(ii) KESB’s letter dated 18.3.2013 still made any such works conditional upon KESB submitting a costing to the consultant, KS Consulting Engineers Sdn Bhd ("KS Consultant") before proceeding with the works.

(iii) In its letter dated 8.4.2013, KESB acknowledged that "official instruction from the S.O. is needed before we proceed with the works." 26

(iv) In its letter dated 25.4.2013, MPK maintaned the stand that "kerja-kerja underfloor trunking adalah di bawah skop kerja asal dan permohonan tambahan kos tidak akan dilayan."

In its letter dated 29.4.2013, KESB recorded that the parties had agreed that KESB would proceed with the underfloor trunking work "bagi mengelakkan kelewatan terhadap kemajuan keseluruhan projek" and that the parties had further agreed that "kos bagi kerja-kerja underfloor trunking ini akan dibincangkan pada masa akan datang."

There was no evidence of any discussions between the parties on the costs, which must surely be a prerequisite to any claims being made. In the Payment Claim, the Adjudication Claim and in KESB’s Affidavit there is no mention whatsoever of any discussion of or any invitation to the issue of costs with MPK even though that was the last recorded understanding of the matter, and KESB did not even adduce any demands it alleged it issued to

In his Adjudication Decision, the Adjudicator did not mention any of these matters, and we can only assume that he did not consider any of them at all. He failed to take into account all of these relevant considerations. 27

Consequently, we say the Adjudicator exceeded his jurisdiction by failing to apply the express Conditions of Contract and by failing to decide on the matters and issues raised in the Adjudication Reply and the Adjudication Response. [31] With respect to learned counsel for MPK, the fact that he disagreed with the interpretation of the Adjudicator on Clause 24 and 25 does not mean that the Adjudicator had exceeded his jurisdiction. So long as the Adjudicator had asked himself the right question, the fact that he had arrived at a different answer from the Respondent MPK or even a wrong answer from the perspective of the Respondent, does not mean that the Adjudicator had exceeded his jurisdiction. [32] It was certainly within the Adjudicator’s jurisdiction to decide on whether the Claim of the Claimant in Claim No.3 of the VO Claim is a Payment Claim and whether that claim had been proved. It is a mixed finding of fact and law and this being not an appeal, this Court cannot interfere on ground of excess of jurisdiction premised on a wrong finding of fact flowing from a wrong interpretation. If indeed there is an error of interpretation here of the relevant clauses, it is not an error that had taken the Adjudicator out of the jurisdiction conferred on him by the Payment Claim and Payment Response and taking into the consideration the matters raised in the Adjudication Claim, the 28 Adjudicator Response and the Adjudication Reply. It is at most an error that has to be corrected at Arbitration since there is an arbitration clause in the contract between the parties. [33] With respect, the Adjudicator had addressed the issues raised by the Respondent MPK as can be seen in the following paragraphs of his Adjudication Decision in CIPAA Decision 1 as follows: “66. To me, whether or not the electrical, ICT, and/or telephone data routing work can amount to a variation depends on whether or not this work was already priced for in the Contract at the time of contract award. This is a question of fact and a matter of interpretation of the terms of the Contract that I will address in this decision.” [34] The Adjudicator made the following findings of facts as follows: “69. The Claimant did not seem to provide all the necessary details to enable the Claimant to price for the full scope of the trunking and associated Works. If all the necessary details had already been provided at contract award, there would have been no need to subsequently issue the construction drawings that added details for: UNDERGROUND TRUNKING (routing); and SERVICE BOX points ... Furthermore the Bills of Quantities only provided for 29 pricing for the telephone system. The Bills of Quantities is very specific in describing the telephone system and I do not see how it can be implied that this section of the Bill of Quantities was to also encompass other services such as electrical, ICT, and/or telephone data.” [35] On Clause 8.2(b) of the Contract, the Adjudicator did address the issue in paragraph 73 of CIPAA Decision 1 and said that he cannot accept the Respondent’s contention that since the Claimant did not highlight the omission in the Bills of Quantities, the Claimant then becomes responsible and liable for the omission. The Adjudicator argues that the omission was not caused by the Claimant and thus it would be wholly unjust to simply transfer responsibility and liability to the Claimant just because it failed to bring the omission to the attention of the Respondent. [36] At paragraph 73 (b) - 74 the Adjudicator reasoned as follows: “(b) Interpreting this clause objectively as to its true intent, when the Claimant brought the omission to the attention of the Respondent, Respondent’s consultants through the S.O. ought to have corrected the omission in the Bills of Quantities so that the Claimant could be fairly remunerated for the additional Works. 30

Furthermore, Clause 26.1 of the Contract states: “The quality and quantity of the Works as set out in the Bills of Quantities shall be the basis of the Contract Sum. Any error in description or quantity or omission of Works from the Bills of Quantities shall not vitiate this Contract but shall be rectified and the amount in respect of such rectification shall be added to or deducted from the

Contract Sum as the case may be.” [Emphasis in bold added] By reason of the matters stated above, I find that the Claimant is in principle entitled to a variation under Clause 24 [Variations] of the Contract due to the omission on the Bills of Quantities to enumerate and provide an appropriate breakdown for all underfloor trunking and associated work.” [37] With respect to quantum which is a matter of findings of facts which this Court would not interfere, the Adjudicator has carefully proceeded as follows: “75. As to quantum, in the absence of any evidence to suggest that the rates and prices claimed by the Claimant are not unreasonable, I accept in principle that the additional work under 31 this issue No.3 amounts to RM1,067,210.00. As the different services in the Main share a common trunking route and system, it would however be appropriate to deduct the sum of RM 124,836.00 that was priced for and allowed for by the Claimant in the Bills of Quantities for the ‘Telephone underfloor Trunking System’. Although the Claimant has clarified to me that its pricing in the Bills of Quantities for this item is essentially confined to ‘vertical access box’, ‘upvc ducts and junction boxes’ and ‘3 compartment services outlet box’, the description in the Bills of Quantities (item B.2.2 read as a whole), for an ‘underground trunking System’ is clear. It is for underfloor trunking and the Claimant is deemed to have priced for the complete system ...I am unable to interpret it differently. This therefore leaves a balance of RM942,374.00 due to the Claimant after applying the deduction.

By reason of the matters stated in paragraph 75 above, I find that the Claimant is entitled to a sum of RM942,374.00 for the variation under this Issue No. 3.” [38] As can be seen the Adjudicator did not uncritically examine the claim of the Claimant where Claim No. 3 in CIPAA 1 is concerned but had given his cogent reasons for allowing the Claim as a Variation claimed under the Contract and had explained how he had assessed the 32 sum owing. I fail to see how he had exceeded his jurisdiction in so doing though the Respondent MPK might not be happy with his Decision. [39] With respect to Claim No. 4 in CIPAA 1 proceedings, KESB as Claimant in paragraphs 39-44 of its Adjudication Claim, had alleged that:

this Claim No. 4 arose because of an "under-design" in the construction drawings for the roof-trusses for the multi-purpose hall and the structural beam for the main office;

(ii) at a Meeting on 27.2.2013 it was agreed that KESB "would execute a new design for the multi-purpose hall and the design fee and additional costs to the steel structure shall constitute a positive variation order";

(iii) at that same Meeting on 27.2.2013 it was also agreed that roof trusses resting on the roof beams shall be designed by KESB and would also constitute a positive variation order;

(iv) KESB had submitted to MPK the approved design drawings for the roof beams to superstructures and approved design drawings for the roof trusses to the multi-purpose hall, together with the variation orders for the sum of RM1,150,770.80 claimed; and

despite doing these works, MPK failed to pay it that sum. [40] In its Adjudication Response, MPK denied all of these allegations. 33 [41] Learned counsel for MPK submitted that if it were true that there was an under-design, then KESB should have invoked Clause 8.2 of the Conditions of Contract to "immediately give to the S.O. a written notice specifying the discrepancy or divergence" that would have enabled the S.O. to "issue instructions in regard thereto". That instruction would have constituted a Variation Order. However, this course was never taken and there was no Variation Order. [42] As for the allegation that a "positive variation order" was agreed at a Meeting on 27.2.2013, MPK’s stand is that the Conditions of Contract only provide for a Variation Order issued by the S.O., of which there was none. [43] It was also argued that the Minutes of the Meeting do not show any such agreement. [44] In paragraphs 87-89 of the Adjudication Decision, the Adjudicator held to the effect that this Claim No. 4 already fell within the design and build items described in the Bill of Quantities. MPK argued that this meant that they were already within KESB’s scope of work. [45] MPK argued that in so holding, the Adjudicator should have dismissed Claim No. 4. Instead (as evidenced by paragraphs 90-95 of the Adjudication Decision) on his own accord the Adjudicator proceeded 34 "to allow the Claimant for a variation of under this Issue No. 4" and decided on the quantum to be awarded. [46] The arguments and reasonings of the Adjudicator had been meticulously set out from paragraphs 77-95 of the CIPAA Decision 1 and they are essentially findings of mixed fact and law which this Court has no business to interfere with on the ground of excess of jurisdiction. The Adjudicator had given his cogent reasons for considering the Claim as Variation Works and had given a detailed assessment of the quantum involved and any unhappiness with such a Decision has to be challenged by way of Arbitration. [47] The rational and reasoning of the Adjudicator is set out in paragraphs 90-91 of the CIPAA 1 Decision as follows: “90. However, since the tender drawings also under-estimated the amount of work for the design and build items for the roof works (i.e. non-proprietary or Zone A works), it also seems only fair to allow the Claimant for a variation under this Issue No.4, as changes to the design concept or design criteria were necessary which in turn resulted in a significant increase of the works required of the Claimant. 35

As to quantum, in the absence of any evidence to challenge the rates and quantities by the Claimant for this Issue No.4, I accept the figures submitted by the Claimant in principle. An adjustment however should be made to cater for the amounts the Claimant ought to have originally included for the Zone A Works ...” [48] After taking that into consideration and setting out the calculation of the quantum at para 92-93 of the CIPAA Decision 1, the Adjudicator arrived at the sum for the office building to be RM723,469.04 and together with the sum of RM203,821.80 allowed for the multipurpose hall the total that the Claimant was entitled to under Claim No. 4 was RM927,290.84. [49] Again, this being not an appeal, this Court should restrain itself from descending into the merits of the case. Suffice to say that this Court is more than convinced that the Adjudicator did not exceed his jurisdiction in so acting and deciding the way he did. In respect of CIPAA Decision 2 36 Claim Item Particulars Amount Claimed

Boxing Up with Aluminium Cladding for Super Structure, Multipurpose Hall and Related Works - Costs for variation/ additional works. 2,356,880.00 2,356,880.00

Rear Curve Feature Steel Structure complete with Aluminium Composite Panel - Costs for variation/additional works. 236,100.60 111,100.60

Backing Brickwall and Screed For Aluminium Composite Panel - Costs for variation/additional works. 264,368.00 264,368.00

Internal Walls - Costs for variation/ additional works. 511,056.00 511,056.00

Fire Safe Rockwool Behind Fixed Glass Panel In Curtain Wall - Costs for variation/additional works. 1,085,500.00 1,085,500.00 [50] In so far as the same arguments law raised in challenging this CIPAA Decision 2, this Court will adopt the reasons given above with respect to the challenge that the Variations claimed are not proper variations under the Contract. The arguments raised in trying to set 37 aside the CIPAA Decision 2 would similarly have to be dismissed for the reasons above stated. [51] However there were also new issues raised which this Court would consider below. Whether the Claims for Variation Works having not been certified by the S.O., the same are not Payment Claims within the meaning of the CIPAA 2012 and are thus premature [52] I agree with learned counsel for the Claimant that one of the true objects in section 25(n) of the CIPAA 2012 is indeed to destroy the very contention raised by MPK that the Adjudicator had no jurisdiction in granting KESB’s claim in absence of certificates issued by the S.O. [53] Section 25 (m) and (n) of the CIPAA 2012 is couched in clear language and it reads as follows: “25. Powers of the Adjudicator The adjudicator shall have the powers to— ...

Review and revise any certificate issued or to be issued pursuant to a construction work contract, decision, instruction, 38 opinion or valuation of the parties or contract administrator relevant to the dispute;

Decide or declare on any matter notwithstanding no certificate has been issued in respect of the matter. ...” (emphasis added) [54] As can be seen, if the Respondent’s argument is that the Claimant must wait for the necessary Certificate to be Issued for the Variation Works, then section 25(m) empowers the Adjudicator to revise and review any Certificate to be issued. [55] If the Respondent’s argument is that no Certificates will be issued as these do not qualify as Variation Works and that no variation orders in writing had been issued by the S.O. then section 25(n) expressly empowers an Adjudicator to decide on the Claim even though no Certificate will be issued or has been issued. [56] This is clearly to prevent a non-paying party from thwarting the purpose of the CIPAA 2012 by deliberately denying or delaying the issuance of a certificate for work done or Variation Works done. [57] A “payment” under the CIPAA in section 4 means “a payment for work done or services rendered under the express terms of a construction contract.” 39 [58] A Payment Claim under section 5(2) of the CIPAA shall include the following: “(2) The payment claim shall be in writing and shall include—

The amount claimed and due date for payment of the amount claimed;” (emphasis added) [59] Lest it be argued that if no Certificate is issued and as such there can be no due date for payment, then one must turn to section 36 of the CIPAA 2012. Parliament had anticipated this and included a section 36 which reads as follows: “36. Default Provisions in the Absence of Terms of Payment

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) 40 [60] The object of the CIPAA 2012 as stated in its long title is as follows: “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.” [61] The golden rule of interpretation of statute is “… that we are to take the whole statute together, and construe it all together …”: per Lord Blackburn in River Wear Commissioners v Adamson and others [1874-80] All ER Rep 1, at p 12. [62] I agree with learned counsel for the Claimant that the words in section 25(n) of the CIPAA 2012 are in themselves precise and unambiguous. A Court should give effect to the plain words. There is no question of construction: Lau Keen Fai v Lim Ban Kay @ Lim Chiam Boon & Anor [2012] 2 MLJ 8, 14[10], FC. [63] Further, ‘… no more can be necessary than to expound those words in their natural and ordinary sense. The words themselves alone do, in such case, best declare the intention of the lawgiver’: per Tindal CJ in Sussex Peerage Case (1844) 8 ER 1034; cited with approval in 41 Dr Koay Cheng Boon v Majlis Perubatan Malaysia [2012] 3 MLJ 173, 196 at [47], FC. [64] The absence of a Certificate whether in the sense of it not being issued yet or that it would not be issued is certainly no bar to a claim in Adjudication under the CIPAA 2012. Whether the Adjudicator had in CIPAA 1 dismissed Claim No. 1 and thus the Adjudicator had acted in excess of his jurisdiction in allowing the same Claim now in Claim No. 1 in CIPAA 2 [65] MPK also alleged that the following claim by KESB in CIPAA 2 had been decided by the Adjudicator in CIPAA Decision 1 and that the Adjudicator had no jurisdiction to decide the same in CIPAA 2 and that res judicata applies to bar the Claim from being readjudicated. Claim Item Particulars Amount Claimed (RM) Amount Allowed (RM)

Exterior Finishes – costs for variation and additional works 3,480,000.00 1,397,510.00 [66] I agree with the Claimant that whether dispute in CIPAA 1 is substantially the same as CIPAA 2 is a question of fact and degree for 42 the Adjudicator to decide. In deciding, it is necessary to consider what had actually and finally been decided in CIPAA 1. [67] Learned counsel for the Claimant referred to the English Court of Appeal in Harding (t/a MJ Harding Contractors) v Paice [2015] EWCA Civ 1231; [2015] ConLR 299 where it was held at p 313 at [57] per Jackson LJ as follows: “[57] It is quite clear from the authorities that one does not look at the dispute or disputes referred to the first adjudicator in isolation. One must also look at what the first adjudicator actually decided. Ultimately, it is what the first adjudicator decided which determines how much or how little remains available for consideration by the second adjudicator.” (emphasis added) [68] In Balfour Beatty Engineering Services (HY) Ltd v Shepherd Construction Ltd [2009] EWHC 2218 (TCC) Akenhead J. observed as follows: “41 ...once an adjudicator has decided the first dispute, that dispute cannot be referred to adjudication again because it has already been resolved. The second adjudicator must be astute to see that he or she decides nothing to override or undermine the first adjudicator's decision; jurisdictionally, a later adjudicator's 43 decision cannot override an earlier valid adjudicator's decision. The later adjudication decision may be wholly or partly unenforceable if materially it purports to decide something which has already been effectively and validly adjudicated upon.” (emphasis added) [69] In CIPAA 1, KESB as Claimant had initially lodged a claim for Exterior Finishes – Costs of variation or additional works, i.e. T3 Change in its Payment Claim of CIPAA 1; see CBP(1): p 57. However, in the Adjudication Claim, the claim was for a W10 Change, see CBP(1): p 79-

[70] In the CIPAA Decision 1, the Adjudicator decided that he had no jurisdiction to deal with the W10 Change since it did not form part of the Payment Claim in CIPAA 1. The relevant parts of the CIPAA Decision 1 state as follows: “57. [Looking at the Payment Claim] … This appears to be a T3 Change and not a W10 Change, as the description is not only consistent with the description in the 13.8.2012 letter but it also expressly refers to the same letter. This is indeed surprising to me. Based on the evidence and the submissions before me, it is now apparent that the Claimant initially 44 lodged a claim for a T3 Change in its Payment Claim, but subsequently amended it to a claim for a W10 Change.

On the inconsistent claims, i.e. T3 change vs W10 change, I am guided by the Construction Industry Payment and Adjudication Act 2012, in particular section 7(1) … And also

Section 27(1) … From sections 7(1) and 27(1) of the Act, it is clear to me that my jurisdiction in these proceedings are governed by the issues raised by the Claimant in the Payment Claim.

Upon closer examination of the parties’ submissions and the evidence before me, it is clear to me that the Claimant’s claim under this Issue No.2 should be for a T3 change and not a W10 change. I have no jurisdiction to deal with the W10 change and therefore cannot proceed further to deal with the W10 change.” (emphasis added) [71] I agree with learned counsel for the Claimant that it is crystal clear from the CIPAA Decision 1 that W10 change (which is the subject matter here) had never been decided for the reasons as stated at the said para

It follows that MPK’s contention that the Adjudicator had no jurisdiction to decide KESB’s claim for Exterior Finishes is wholly 45 misconceived. The very same issue was also raised by MPK in its Adjudication Response in CIPAA 2 and duly considered by the Adjudicator in its CIPAA Decision 2 as follows: “45. Having considered the respective submissions of the parties, I find as follows:

Although the W10 change in specifications was referred to in the previous adjudication, it is clear that no decision on merits was made as it was not within the jurisdiction of the adjudicator. There is however no question of jurisdiction here. Accordingly, I find that I may proceed to decide on this Issue No.1 in this adjudication.” [72] I have no good reason to disagree with the Adjudicator’s finding of fact and his understanding of the law where res judicata is concerned. Whether Claims No. 4,5 and 6 in the CIPAA 2 Adjudication should have been brought in CIPAA 1 Adjudication [73] Learned counsel for the Respondent argued that the due dates for

Claims No. 4, 5 and 6 in the CIPAA 2 Adjudication were 19.5.2014,

5.2014 and 20.5.2014 respectively. [74] The Payment Claim and Adjudication Claim for the CIPAA Adjudication 1 were respectively dated 28.7.2015 and 17.12.2015 which 46 means that Claims No. 4,5 and 6 proceeded with in CIPAA 2 Adjudication were already due when CIPAA 1 had commenced. [75] There is no bar to an Adjudication of a Payment Claim where separate claims are made for so long as it is brought within the limitation period as is provided for in section 7(3) of the CIPAA 2012 as follows: “(3) A dispute referred to adjudication under this Act is subject to the Limitation Act 1953 [Act 254], Sabah Limitation Ordinance [Cap. 72] or Sarawak Limitation Ordinance [Cap. 49] as the case may be.” [76] The fact that the CIPAA 2012 allows for consolidation of proceedings in a case where there is more than one Adjudication afoot before the same Adjudicator, with the consent of all the parties, would imply that there may be different Adjudications afoot with respect to different claims involving the same subject matter as in arising from the same Contract. Section 14 of the CIPAA 2012 reads: “14. Consolidation of Adjudication Proceedings If two or more adjudication proceedings in respect of the same subject matter are being adjudicated before the same adjudicator, the adjudicator may, with the consent of all the parties to the 47 adjudication proceedings, consolidate and adjudicate the matters in the same proceedings.” [77] Even in a court proceeding there is no prohibition against a different claim arising from the same contract being brought separately especially if lumping them all together might delay the prosecution of the claim, for so long as the claims are brought within limitation and they are all separate causes of action. [78] So long as a Payment Claim complies with and is identified where the amount of Claim is concerned and when it is due (section 5(2)(a)) and that there are details provided to identify the cause of action including the provision in the construction contract to which the payment relates (section 5(2)(b)) and that there is a description of the work or services to which the payment relates (section 5(2)(c)), then there appears to be no prohibition to an unpaid party serving a Payment Claim who may then proceed with an Adjudication on the Payment Claim. [79] There is certainly no good rationale to prohibit a Payment Claim that could have been brought earlier as being included together in the earlier Payment Claim from being brought later. It certainly does not prejudice the Respondent here in any way though of course for saving of both time and resources, it would not be prudent to pursue an Adjudication in installments. 48 [80] However one can appreciate that sometimes the nature of a Claim is such that the documents may not be ready or that the Subcontractors involved are different persons or that there may be some rectification works to be done with respect to work which payment is due or that parties are still negotiating towards a settlement for that claim. [81] I do not think that one should equate an Adjudication Proceeding to a Court Proceeding where a stricter stand on cause of action estoppel may apply. [82] The Singapore Court of Appeal when faced with a not too dissimilar argument in Lee Wee Lick Terence (alias Li Weili Terence) v Chua Say Eng (formerly trading as Weng Fatt Construction Engineering) and another appeal [2012] SGCA 63 observed as follows: “90 Accordingly, there is nothing in the language of reg 5(1) of the SOPR to compel a claimant to make monthly payment claims for work done in the previous month, whether he wants to or not. The Act is intended to facilitate the payment of progress payments at monthly intervals. If a claimant chooses not to make a payment claim at monthly intervals, because, for example, he is not experiencing any cash flow problems or because it is not convenient for him to do so, there is no reason to compel him 49 to do otherwise. If a claimant decides to serve payment claims at longer than monthly intervals, e.g., quarterly payment claims, it would also benefit the respondent, who need not pay monthly claims. In our view, the mandatory language of reg 5(1) of the SOPR in relation to service of the payment claim, when read with s 10(1) of the Act, serves to impose a maximum frequency of one payment claim per month. It bars the claimant from making more than one monthly claim in respect of a progress payment. Imposing such a maximum frequency for making payment claims is fair and reasonable to both parties.” (emphasis added) [83] I would dismiss this argument of the Respondent and in any event it does not affect the jurisdiction of the Adjudicator to hear the Payment Claim, much less has the Adjudicator exceeded his jurisdiction by so hearing. Whether the Adjudication Decisions should be refused enforcement merely because the Respondent had asserted that it has an LAD claim far in excess of the Adjudication Sums [84] As at the date of the hearing of the applications of the Claimant for enforcement of the CIPAA Decisions 1 and 2, the Respondent MPK had not commenced any Arbitration with respect to its claims for LAD which 50 it said would far exceed the Adjudication Sum in CIPAA Decisions 1 and 2, bearing in mind that CIPAA Decision 2 was delivered on 24.11.2016. [85] Learned counsel for the Claimant had summarized the Respondent’s grounds in opposing OS 173 and OS 174 for the Enforcement of the 2 Adjudication Decisions as follows:

The completion date for the Project was 8 August 2013 which was later extended to 17 February 2016;

KESB failed (not admitted) to finish the Project on 17 February 2016 and that the Superintending Officer had issued a Perakuan Kerja Tak Siap to KESB;

(3)

In the event the CIPAA Decisions are enforced and if MPK had succeeded in its proposed claim against KESB in the later arbitration, KESB will not be able to pay for the LAD or to refund the sum awarded in CIPAA Decisions to MPK. [86] Learned counsel for the Claimant argued that MPK’s contention is misleading and irrelevant to the present OSs before this Court, in that: 51

KESB had applied to MPK for an extension of time of 524 days but a mere 51 days were granted by MPK. By a letter dated 12 January 2016, KESB had appealed to MPK against the extension of time until 17 February 2016 pursuant to clause 43 of the Contract (“EOT”);

The alleged issue of LAD was never raised by MPK in either CIPAA 1 or 2 and does not form any part of the learned Adjudicator’s findings in CIPAA Decisions 1 and 2; and

The real purpose of MPK is for a collateral purpose to launch an unfair attack on the CIPAA Decisions in attempting to raise and argue on an issue to the effect of depriving KESB of its fruits of the CIPAA Decisions. [87] The Respondent argued that as at 27.3.2017, the LAD payable by KESB to MPK was RM4,848,000.00. [88] As at the date of the hearing of KESB’s Application (18.7.2017), the total LAD payable by KESB to MPK would be RM6,204,000.00. [Additional 113 days x RM12,000.00] + RM4,848,000.00] [89] The Respondent further argued that these facts show that, if the Adjudication Decision is enforced and MPK is compelled to pay the said sum of RM1,869,664.84 and RM5,726,414.60 in the CIPAA Decisions 1 52 and 2 respectively, there is a strong likelihood that MPK will not be able to recover from KESB the LAD which KESB owes to it under the Contract. [90] It was highlighted by the Claimant that the subject matter of the CIPAA Decision 1 and 2 are not pending any final determination by arbitration nor it is subject to a stay under section 16 of the CIPAA 2012. [91] I agree with the Claimant that the Respondent has no cogent reasons to oppose the enforcement of the 2 Adjudication Decisions. [92] There is no proper or formal application filed under section 16 of the CIPAA 2016 to stay the Adjudication Decision pending Arbitration. Section 16 provides as follows: “16. Stay of Adjudication Decision

A party may apply to the High Court for a stay of an adjudication decision in the following circumstances:

An application to set aside the adjudication decision under section 15 has been made; or

The subject matter of the adjudication decision is pending final determination by arbitration or the court.” (emphasis added) 53 [93] There being no pending arbitration or litigation and coupled with the fact that there is no Stay Application under section 16(1)(b) of the CIPAA 2012, this Court is in no position to grant a stay of the Adjudication Decisions which are ripe and right for enforcement under section 28 of the CIPAA 2012. [94] The Adjudication Decisions had been regularly obtained and delivered in accordance with the CIPAA 2012 and there are no vitiating factors under section 15 of the CIPAA 2012 that have been raised successfully to set aside the Adjudication Decisions. [95] Therefore this Court is left with the only order that it is compelled by section 28 of the CIPAA 2012 to make, which is to enforce the 2 Adjudication Decisions. [96] Learned counsel is at liberty to apply for stay of the judgments of the Court arising out of the enforcement orders made if indeed it may show special circumstances. Pronouncement [97] For the reasons given above I had dismissed MPK’s Originating Summons Nos: WA-24C-23-02/2017 and WA-24C-18-01/2017 for setting aside the two Adjudication Decisions in CIPAA Decisions 1 and 2 respectively with costs of RM5,000.00 each to be paid by MPK to KESB. 54 [98] Correspondingly and consequently I had allowed KESB’s Applications in Originating Summons Nos: WA-24C-173-12/2016 and WA-24C-174-12/2016 to enforce the two Adjudication Decisions in CIPAA Decision 1 and 2 respectively with costs of RM3,000.00 to be paid by MPK to KESB. Dated: 8 December 2017. - sgd - Y.A. LEE SWEE SENG Judge Construction Court Kuala Lumpur For the Plaintiff in : OS WA-24C-173-12/2016 : Ben Chan together with Chin and OS WA-24C-174-12/2016. : Yu Yen and for the Defendant in : (Messrs Mah-Kamariyah & and OS WA-24C-18-01/2017 and : Philip Koh) OS WA-24C-23-02/2017. : For the Defendant in : OS WA-24C-173-12/2016 : Azlan Sulaiman and OS WA-24C-174-12/2016 : (Messrs Azmi & Associates) 55 and for the Plaintiff in : OS WA-24C-18-01/2017 and : OS WA-24C-23-02/2017. : Date of Decision: 18 July 2017.