Ktcc Mall Sdn Bhd v Tcs Construction Sdn. Bhd. (B-02(C)(A)-130-01/2024)

Before us are 2 appeals being Appeal No. B-02(C)(A)-130-01-2024 (Appeal 130) and Appeal No. B-02(C)(A)-131-01-2024 (Appeal 131) respectively brought by KTCC Mall Sdn Bhd (Appellant) against the decision given by the Shah Alam High Court on 12 January 2024 of which both matters were decided in favour of TCS Construction Sdn Bhd (Respondent).

Both Appeal 130 and Appeal 131 were heard together by the High Court as they involved the same parties and similar facts. Accordingly, we have heard both appeals simultaneously. Having heard oral submissions from learned counsel for both sides, we reserved our decision until today.

Appeal 130 concerns an application under Section 30 of the Construction Industry Payment and Adjudication Act 2012 (CIPAA). This application was made by the Respondent following adjudication proceedings against MPM Project Management Sdn Bhd (MPM), pursuant to an Adjudication Decision dated 13.9.2022 (AD) for the sum of RM6,141,557.77 obtained against MPM.

On the other hand, Appeal 131 is against the same Shah Alam High Court decision dated 12 January 2024, which dismissed the Appellant's application for declaratory orders. Specifically, the Appellant had sought a declaration that the Respondent is not entitled to direct payment, on the basis that no sums remain due or payable by the Appellant to MPM.

For the record, a stay of execution order was granted on 22 August 2024 by the High Court for the Order in Appeal 130. Brief Facts of the case in the Adjudication Proceedings

The Appellant is the employer of the Project and had on February 2015 appointed MPM to carry out the execution, performance, and design of the Project.

In turn, MPM had appointed the Respondent as its subcontractor for the Project to carry out the main builders work by way of Letter of Acceptance dated 19 September 2018.

The Appellant had also provided a Letter of Undertaking on 19 September 2018 to the Respondent to undertake to settle MPM's outstanding amount if MPM defaults in the same.

A Certificate of Practical Completion (CPC) was issued by the Appellant on 23 January 2020 to MPM signifying the completion of the Project.

Thereafter the Quantity Surveyor (QS) assessed the final contract sum as RM224,053,767.00, to which the Appellant contends was fully paid to MPM.

MPM was subsequently wound up on 28 February 2022.

On 13 September 2022 the Learned Adjudicator (Adjudicator) in the CIPAA proceedings had awarded the sum of RM6,141,557.77 (Adjudicated Sum) to the Respondent which was to be paid by MPM within 14 days thereafter i.e. 27 September 2022.

The Respondent issued a request dated 21 September 2022 (21.9.2022 Request) to the Appellant to pay the Adjudicated Sum, interest and cost of the adjudication proceedings totaling RM6,922,576.82 pursuant to Section 30 of CIPAA.

On 5 October 2022, the Appellant responded to the 21.9.2022 Request and denied any obligation to pay the Respondent. On the same day, the Appellant wrote to MPM and its liquidator requesting proof of payment to the Respondent.

The Appellant's learned counsel had firstly pointed out to this Appellate Court that this Court in Civil Appeal No. B-02(C)(A)-1503 08/2022 had on 4 January 2024 dismissed a similar Section 30 of CIPAA claim from one other subcontractor, known as Lua Yik Hor t/a Better One Marketing, (Better One Case) against the Appellant in relation to the same Project on the ground that there was no money due and payable by the Appellant to MPM. The same was informed to the High Court judge herein who never the less allowed the Respondent's claim under Section 30 of CIPAA.

The Appellant thus submits that since the Better One Case, which is identical to the issue in this case, there is no money due and payable by the Appellant to MPM.

The Appellant contends that the learned High Court Judge (HCJ) had informed the parties herein on the date the matters were fixed for decision before the learned HCJ, that the HCJ would prefer to wait for the decision of the Better One Case in the Court of Appeal before the HCJ made her decision.

The Appellant then claims it had informed the HCJ on 4 January 2024 by way of a letter of the Court of Appeal decision in the Better One Case and thereafter by way of another letter dated 10 January 2024 attached the minutes of the Better One Case Court of Appeal decision. Despite the same, the HCJ had on 12 January 2024 allowed the Section 30 CIPAA application and dismissed the declaration sought by the Appellant.

The Respondent on the other hand disputes the Appellants contentions and version of events. Instead the Respondent submits that at the material time of the Respondents written submissions at the High Court, the grounds for the Better Once Case were available and was a persuasive precedent.

It is also submitted by the Respondent that the Appellant had at the material time attempted to distinguish the Better One Case and put forward to the HCJ that she was entitled to make her own finding of facts.

It was also submitted by the Appellant that the 21 September 2022. Request was issued 6 days before the Adjudicated Sum was due on 27 September 2022.

It must be pointed out that apart from learned counsels for both sides making their oral submissions before us as mentioned earlier, the parties had also earlier filed in their written submissions and written replies in respect of both Appeals of which we have also carefully read and considered.

After duly hearing both the appeals before us, we are of the view that the main issue is "whether there are any sums due and payable by the Appellant" and if so "whether s 30 CIPAA can be invoked".

For ease of reference, Section 30 of CIPAA provides: "(1) If a party against whom an adjudication decision was made fails to make payment of the adjudicated amount, the party who obtained the adjudication decision in his favour may make a written request for payment of the adjudicated amount direct from the principal of the party against whom the adjudication decision is made.

Upon receipt of the written request under subsection (1), the principal shall serve a notice in writing on the party against whom the adjudication decision was made to show proof of payment and to state that direct payment would be made after the expiry of ten working days of the service of the notice.

In the absence of proof of payment requested under subsection (2), the principal shall pay the adjudicated amount to the party who obtained the adjudication decision in his favour.

The principal may recover the amount paid under subsection (3) as a debt or set off the same from any money due or payable by the principal to the party against whom the adjudication decision was made.

This section shall only be invoked if money is due or payable by the principal to the party against whom the adjudication decision was made at the time of the receipt of the request under subsection (1)." Is there a breach of the Stare Decisis rule and whether there is money due and payable by the Appellant to the Respondent?

Following from this, we will now deal with the issue of whether the doctrine of stare decisis has been breached. We have read the HCJ's Written Grounds in respect of both the matters before her and find that no reference was made by the HCJ to the Better One Case Court of Appeal decision.

It is clear and settled law, that the High Court is to be bound by a decision of the Appellate Courts i.e. the Court of Appeal or the Federal Court. In what is known as the doctrine of stare decisis, a decision of the said Court of Appeal or the Federal Court is to be binding on the Courts below.

This doctrine was made abundantly clear in Public Prosecutor v Datuk Tan Cheng Swee & Anor [1980] 2 MLJ 276 where our Federal Court, through the judgement of the learned judge Chang Min Tat FJ had held "It is however necessary to reaffirm the doctrine of stare decisis which the Federal Court accepts unreservedly and which it expects the High and other inferior Courts in a common law system such as ours, to follow similarly. As far back as 1833, Baron Parke in Mirehouse v Rennell 6 ER 1015 at page 1023 commenting on the duties of a judge has this to say: "Our common-law system consists in the applying to new combinations of circumstances those rules of law which we derive from legal principles and judicial precedents; and for the sake of attaining uniformity, consistency and certainty, we must apply those rules, where they are not plainly unreasonable and inconvenient, to all cases which arise; and we are not at liberty to reject them, and to abandon all analogy to them, in those to which they have not yet been judicially applied, because we think that the rules are not as convenient and reasonable as we ourselves could have devised. It appears to me to be of great importance to keep this principle of decision steadily in view, not merely for the determination of the particular case, but for the interests of law as a science."

The afore said case of Datuk Tan Cheng Swee & Anor (supra) had also quoted the case of Miliangos v George Frank (Textiles) Ltd [1975] 2 WLR 555, where Lord Denning M.R. at page 564 F6-G3 said in respect of the effect of a judgment of the Court of Appeal on the High Court that "... whether right or wrong, it seems to me that once this court has given a decision upon it all lower courts should follow the decision of this court unless and until it is reversed by the House of Lords. In that way any embarrassment will be avoided."

In the minutes of the decision in the Better One Case Court of Appeal decision, it was stated that: "We find that the appellant had proved that there is no money due and payable by it as the principal to the main contractor, MPM. This is evidenced from fresh evidence in the form of Final Statement of Account and that penultimate certificate number 48. There is nothing in evidence to suggest that such documents are not genuine. Therefore, we allow the appeal and set aside the decision of the High Court with costs of RM15,000...”

We now come to the evidence presented before us on whether there is money due and payable by the Appellant to the Respondent. The said evidence consists of:

1 the Statement of Final Account dated January 2020 showing the sum of RM224,053,767.00 as the contract sum and MPM acknowledging the said sum as being full and final settlement of the Contract.

2 the penultimate certificate (valuation no 48) dated 24 February 2020 issued by the QS certifying the sum of 'nil' being owed to MPM by the Appellant.

3 the payment vouchers, receipts, remittance forms, letters of instruction to the bank, bank account statement, copies of cheques and tax invoices allegedly showing payment of RM224,053,767.00 for work done being paid.

The Respondent states that the Letter of Undertaking is proof of the Appellant's promise to make direct payment to the respondent in the event MPM were to default in making payments to the Respondent within 14 days from the date of receiving the payment request.

After perusal of the aforesaid contemporaneous documentary evidence, we are convinced on a balance of probabilities that the Appellant has proven that there are no sums due and payable to MPM. Our findings are thus similar to the Court of Appeal in the Better One Case.

Apart from our own decision that there are no sums due and payable by the Appellant to MPM based on our said findings, we have on our decision on the doctrine of stare decisis, and after considering the Better One Case Court of Appeal decision, find that the decision therein would bind the HCJ as the facts therein appear, in our view, to be similar to the case before us and as such the doctrine of stare decisis must come into play, see the decision of the Federal Court in Yang Chin Lang v Yan Chong & Sons Motor Co Ltd [1968] 2 MLJ 8 where it was stated by Ong Hock Thye FJ: "...I agree and have only to add that, in my judgment, Oriental Bank of Malaya Ltd Subramaniam [1958] MLJ 35 CA is, on the facts, so indistinguishable from the instant case that we are bound by stare decisis to follow it. I, too, would dismiss this appeal with costs."

We have also observed that MPM appears to owe the Appellant a sum of RM7,950,000.00 as liquidated ascertained damages (LAD) as per the Proof Of Debt dated 15 September 2022 filed with MPM's liquidator which has been supported by the Appellants Certificate of Non Completion (CNC) dated 1 December 2019, a letter from the Appellant to MPM dated 30 January 2020 stating the LAD due and the QS recommending that the said sum be deducted as liquidated damages based on 53 days of delay (RM150,000.00 per day).

Based on all of the above, we hold that the High Court had erred in its findings that there are sums due and payable by the Appellant to MPM.

It was further submitted by the Appellants that Section 30 of the CIPAA cannot be invoked as MPM is in liquidation.

In CT Indah Construction Sdn Bhd v BHL Gemilang Sdn Bhd [2019] MLJU 1215, the Court of Appeal had held: [9] It was argued by learned counsel for the respondent that the appellant is not entitled to seek direct payment from the respondent as BHL Builders had been wound up and is now under receivership. According to learned counsel, any payment to be made to the appellant would amount to undue preference in the appellant's favour. It was pointed out that the appellant is not the only creditor of BHL Builders as BHL Builders has 69 other creditors waiting in line to have their debts settled. [14] In the instant case, the liability of the respondent to make payment is imposed by statute, i.e. by section 30(3) of CIPAA. Thus, payment made by the respondent to the appellant would not be from the assets of BHL Builders, but because the adjudicated sum is paid by the respondent, it will be a debt due from BHL Builders to the respondent (once the respondent makes direct payment to the appellant) which the respondent will have to recover from BHL Builders pursuant to subsection 30(4). [15] We agree with learned counsel for the appellant that a legal obligation to pay may arise either by statute (as in the present case) or by contract. In fact, an obligation imposed by statute, in this case by subsection 30(3) of CIPAA, is stronger because in the absence of proof of payment by BHL Builders as requested by the respondent under subsection (2), it becomes mandatory for the respondent as the principal to pay the adjudicated sum of RM9,065,335.67 to the appellant. It is a requirement of law which the respondent has no discretion not to comply with it. [16] We are also in agreement with learned counsel for the appellant that section 30 of CIPAA creates an independent statutory obligation on the part of the respondent, as a principal in its own right, to pay the appellant and that this is a separate obligation to pay imposed by statute which exists in parallel with BHL Builder's obligation as the main contractor to pay the appellant under the adjudication decision."

The facts in CT Indah Construction Sdn Bhd (supra) concerned the appellant therein commencing proceedings under CIPAA against BHL Builders for sums which were outstanding for works done. The learned Adjudicator decided in favour of the appellant and a principal sum of RM9,065,335.67 together with interest and costs was awarded to the appellant. Pursuant to Section 30(1) of CIPAA, the appellant's solicitors issued a request to the respondent as BHL Builder's principal for direct payment of the sum awarded to the appellant. BHL Builders was then subsequently wound up by a third party in the course of the High Court proceedings.

In essence CT Indah Construction Sdn Bhd (supra) is authority that;

1 the liability of the Employer to make payment is imposed by statute, i.e. by Section 30(3) of CIPAA

2 once the adjudicated sum is paid by the Employer, it will be a debt due from BHL Builders to the respondent (once the respondent makes direct payment to the appellant) which the respondent will have to recover from BHL Builders pursuant to subsection 30(4).

3 a legal obligation may arise or be imposed by statute, in that case by subsection 30(3) of CIPAA, where in that case the Appellate Court held is stronger because in the absence of proof of payment by BHL Builders as requested by the respondent under subsection (2), it becomes mandatory for the respondent as the principal to pay the adjudicated sum.

4 section 30 of CIPAA creates an independent statutory obligation on the part of the respondent, as a principal in its own right, to pay the appellant and that this is a separate obligation to pay imposed by statute.

5 the above exists in parallel with BHL Builder's obligation as the main contractor to pay the appellant under the adjudication decision.

The Respondent thus argues that if the condition under Section 30(5) of CIPAA is satisfied, it is irrelevant that MPM is a wound-up company, citing in support thereof CT Indah Construction Sdn Bhd (supra).

At this stage, we pause to note that the Appellant had also referred to the Federal Court case of Dubon Bhd (In Liquidation) v Wisma Cosway Mangement Corp [2020] 4 MLJ 288 which we will deal with in detail in the later part of our written grounds herein.

Be that as it may, we find that in CT Indah Construction Sdn Bhd (supra) the issue of there being no money due and payable by the appellant therein was never raised. Accordingly, the Appellant here submits and we agree that this is quite different from the case before us as there is no money due and payable by the Appellant to MPM.

We agree with counsel for the Appellant that in JDI Builtech (M) Sdn Bhd v Danga Ked Development Malaysia Sdn Bhd (previously known as Greenland Danga Bay Sdn Bhd) [2024] 4 MLJ 29 that the Court of Appeal had in its grounds therein observed, [43] It is no comfort to say to the principal that it can always deduct the amount paid to the subcontractor under the direct payment order that the principal can always set off the amount from current or future certificate of payment or that if the main contract had been terminated, to then recover the sum paid as a debt from its main contractor. It is even more discomforting to the principal when the main contractor is in liquidation and realising that even that is not effective to make the main contractor pay, to now say that the principal must pay first. (our emphasis) [68] The appellant on the other hand and having pursued a winding up of the main contractor would have to pursue recovery through the liquidator appointed for we cannot think of any enforcement of its adjudication decision that could be more effective than the lethal process of a winding up which is to put an end to the main contractor in its ultimate resolution and perhaps thereafter to explore if its directors may have been liable for fraudulent trading or the carrying on of business to defraud its creditors. [69] It is true that the Court of Appeal in CT Indah Construction Sdn Bhd v BHL Gemilang Sdn Bhd [2019] MLJU 1215; [2020] 1 CLJ 75 held that the obligation of the principal to pay the subcontractor is an independent statutory remedy specially provided for under CIPAA but that is still subject to the over-arching provision of s 30(5) of the CIPAA for unless the subcontractor can prove that there is money due or payable by the principal to the main contractor, the other subsections of s 30 could not be engaged and activated. See para [16] of the Court of Appeal's judgment."

The remedy of recovery by the principal / employer from the main contractors i.e. MPM pursuant to Section 30 (4) of CIPAA will in our view not be available to the employer, in our case being the Appellant herein, when MPM is already wound up as the Appellant would have to stand in line with the other creditors of MPM to recover any monies paid in this case from MPM. The Appellant should not be able to circumvent the law on 'undue preference' under Section 528 of the Companies Act 2016 and will as such be put to a real disadvantage in any effort to recover from MPM the monies so paid.

In any event, we hold that payment to the Respondent here would also infringe the law on 'undue preference' under Section 528 of the Companies Act 2016 as this would give the Respondent unfair advantage in recovering the Respondent's debts from MPM over and above MPM's other creditors. This would automatically contravene Section 528 of the Companies Act 2016.

The current law on undue preference can be found in Section 528 of the Companies Act 2016 which reads, "(1) Any transfer, mortgage, delivery of goods, payment, execution or other act relating to property made or done by or against a company which is unable to pay its debts, as the debts become due, from its own money in favour of any creditor or any person in trust for any creditor shall be deemed to have given such creditor a preference over other creditors in the event of the company being wound up on a winding up petition presented within six months from the date of making or doing the same and every such act shall be deemed fraudulent and void.

The date of presentation of the winding up petition shall be:

in the case of winding up by Court:

the date of the presentation of petition; or

(ii) where prior to the presentation of the petition a resolution has been passed by the company for voluntary winding up, the date upon which the resolution to wind up the company voluntarily is passed; and

in the case of voluntary winding up, the date upon which the winding up is deemed by this act to have commenced.

Any transfer or assignment by a company of all its property to the trustees for the benefit of all its creditors shall be void.

Any transfer, mortgage, delivery of goods, payment execution or other act relating to property made or done by or against a company in contravention of this section shall be void except if it is in favour of any person dealing with the company for valuable consideration and without any actual notice of the contravention.

For the purposes of this section, "valuable consideration" means a consideration fair and reasonable money value in relation to:

the value of the property conveyed, assigned or transferred; or

the known or reasonably anticipated benefits of the contract, dealing or transaction.

For the purposes of this section, "notice" includes knowledge of inability to pay a debt by the company or any winding up proceedings against the company or of the facts sufficient to indicate to the person dealing with the wound-up company."

We are minded of the well settled law that any debts owed to a wound-up company would form part of the assets of the wound-up company and which if so recovered, would have to be distributed to the wound-up company's creditors as per section 527 of the Companies Act 2016. The said section 527 (1) and (2) reads,

Subject to this act, in a winding up there shall be paid in priority to all other unsecured debts:

firstly, the costs and expenses of the winding up including the taxed costs of a petitioner payable under section 468, the remuneration of the liquidator and the costs of any audit carried out under section 514;

secondly, all wages or salary, whether or not earned wholly or in part by way of commission, including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating conditions of employment, of any employee not exceeding fifteen thousand ringgit or such other amount as may be prescribed whether for time or piecework in respect of services rendered by him to the company within a period of four months before the commencement of the winding up;

thirdly, all amounts due in respect of worker's compensation under any written law relating to worker's compensation accrued before the commencement of the winding up;

fourthly, all remuneration payable to any employee in respect of vacation leave, or in the case of his death to any other person in his right, accrued in respect of any period before the commencement of the winding up;

fifthly, all amounts due in respect of contributions payable during the twelve months next before the commencement of the winding up by the company as the employer of any person under any written law relating to employees' social security contribution and superannuation or provident funds or under any scheme of superannuation or retirement benefit which is an approved scheme under the federal law relating to income tax; and

sixthly, the amount of all federal tax assessed under any written law before the date of the commencement of the winding up or assessed at any time before the time fixed for the proving of debts has expired.

The debts in each class specified in subsection (1) shall rank in the order specified but debts of the same class shall rank pari passu and shall be paid in full, unless the property of the company is insufficient to meet the debts, in which case the payment shall be reduced and the rate of reduction shall be in equal proportion.

See also the reasoning of the Federal Court in Genisys Intergrated Engineers Pte Ltd v UEM Genisys S/b (In Liquidation) & Ors [2023] 5 CLJ 1 as to the central objective of liquidation where our Apex Court through a judgment delivered by Hasnah Mohammed Hashim FCJ (later CJM) stated, [23] The creditors of the wound-up company are required by law to lodge a POD together with supporting documents to prove that the company in liquidation owes the creditor the sum as specified in the POD. Lodging a POD is a mandatory statutory process for a creditor of a wound-up company. A POD is essentially a documentary declaration made by the creditor, towards establishing or proving the debt that the company owes to its creditors. The POD must be lodged by a creditor with the appointed liquidator and it details the debt owed by the wound-up company together with supporting documents substantiating the debts so claimed. [24] The objective of this exercise is to ensure that the assets of the wound-up company are distributed fairly and justly amongst all creditors so that none of them will gain an advantage over the others. The Supreme Court in Mosbert Bhd (In Liquidation) v. Stella D'Cruz [1985] CLJU 47; [1985] 1 LNS 47 explained that "... the primary object of winding up is the collection and distribution of the assets of the company pari passu amongst unsecured creditors after payment of preferential debts." In other words, the creditor must satisfy the liquidator that the debt is provable and genuine. This is sometimes referred to as 'true liabilities' (see Tanning Research Laboratories INC v. O'Brien [1990] 91 ALR 180). [25] The procedures to claim any debt from the wound-up company is well structured under the WUPR. The duty of the liquidator in making a decision and the right of a party to seek a court order to reverse or vary any decision of the liquidator is governed by r.92 of the WUPR. It is mandatory under the aforesaid rules that the liquidator examine every proof of debt lodged with him, the grounds of the debt, and shall in writing admit or reject it, in whole or in part, or require further evidence in support of the debt."

We have also borne in mind the Federal Court's decision in Teobin Mostapa v Hulba-Danyal Balia & Anlr [2020] 7 CLJ 561 who gave guidance on the approach to be taken in construing provisions of any statute where the said Court held, [30] In our opinion, the rules governing statutory interpretation may be summarised as follows. First, in construing a statute, effect must be given to the object and intent of the Legislature in enacting the statute. Accordingly, the duty of the court is limited to interpreting the words used by the Legislature and to give effect to the words used by it. The court will not read words into a statute unless clear reason for it is to be found in the statute itself. Therefore, in construing any statute, the court will look at the words in the statute and apply the plain and ordinary meaning of the words in the statute. Second, if, however the words employed are not clear, then the court may adopt the purposive approach in construing the meaning of the words used. Section 17A of the Interpretation Acts 1948 and 1967 provides for a purposive approach in the interpretation of statutes (emphasis ours). Therefore, where the words of a statute are unambiguous, plain and clear, they must be given their natural and ordinary meaning. The statute should be construed as a whole and the words used in a section must be given their plain grammatical meaning. It is not the province of the court to add or subtract any word; the duty of the court is limited to interpreting the words used by the Legislature and it has no power to fill in the gaps disclosed. Even if the words in a statute may be ambiguous, the power and duty of the court "to travel outside them on a voyage of discovery are strictly limited." Third, the relevant provisions of an enactment must be read in accordance with the legislative purpose and applies especially where the literal meaning is clear and reflects the purposes of the enactment. This is done by reference to the words used in the provision; where it becomes necessary to consider every word in each section and give its widest significance. An interpretation which would advance the object and purpose of the enactment must be the prime consideration of the court, so as to give full meaning and effect to it in the achievement to the declared objective. As such, in taking a purposive approach, the court is prepared to look at much extraneous materials that bears on the background against which the legislation was enacted. It follows that a statute has to be read in the correct context and that as such the court is permitted to read additional words into a statutory provision where clear reasons for doing so are to be found in the statute itself."

Accordingly, from the proposition in all of the aforesaid cases, it is in our opinion that the statutory safeguards under the insolvency regime must be respected and are not to be displaced without compliance of the law on winding up and due process.

Thus, whilst we agree with the statement that the Court of Appeal in CT Indah Construction Sdn Bhd (supra) which held that the obligation of the principal to pay the subcontractor is an independent statutory remedy specially provided for under CIPAA, that in our considered view does not mean that the obligation under section 30 of CIPAA can over-ride, circumvent or by pass the provisions of section 528 and/or section 527 of the Companies Act 2016.

To do so would be equivalent to the Respondent herein recovering the sums due to them without going through the insolvency process stated in section 528 of the Companies Act 2016 thereby reducing the pool of assets to the other creditors of MPM in contravention of section 528 and 527 of the Companies Act 2016.

It must be understood that the law on 'undue preference' under the Companies Act 2016 was meant to protect creditors of the wound-up company which in our case would be all of MPM's creditors. We reiterate what this Court had stated in Malaysian Trustees Bhd v Transmile Group Bhd & Ors [2012] 3 MLJ 679 where Ramly Ali JCA (as he then was) delivering the judgment of the Court of Appeal held, "The pari passu rule is the cornerstone of insolvency law. It is one of the most fundamental principles of the law of liquidation and is at the very heart of the whole statutory scheme of winding up. It is considered as the most universal of all insolvency principles (emphasis ours). It is an old equitable principle that all persons similarly situated are entitled to equality in treatment in the distribution of the assets of the company in the process of liquidation (see McPherson's Law of Company Liquidation at para 13.100, at pp 13-1051 and Roy Goode Principles of Corporate Insolvency Law at p 175 para 7.02)."

It is trite that CIPAA is a general law enacted to provide speedy, timely and cost-effective dispute resolution mechanism in respect of payment disputes in the construction industry whilst the provisions with regards the law on Winding Up as enacted in the Companies Act 2016 are specific laws which concerns any companies which have been wound up.

In accordance with and applying the generalibus specilia derogant maxim, we hold that the aforesaid two provisions of written law (one being general i.e. CIPAA, and the other specific being the insolvency laws in the Companies Act 2016), the special or specific provision will govern and thus exclude the operation of the general provision and will prevail as stated by Gopal Sri Ram JCA (as His lordship then was) in Language Distributor (M) Sdn Bhd v Tan Hor Teng [1995] 2 CLJ 713, "There is another compelling reason for holding that the respondents have to caveatable interest in the land. It lies in the rule of construction expressed in the maxim generalibus specialia derogant. Where there are two provisions of written law, one general and the other specific, then, whether or not these two provisions are to be found in the same or different statutes, the special or specific provision excludes the operation of the general provision. Thus in Commissioner of Income Tax v. Shahzada Nand & Sons AIR 1966 SC 1342, where (at p. 1347) Subba Rao J, said:. Another rule of construction which is relevant to the present enquiry is expressed in the maxim generalia specialibus non derogant, which means that when there is a conflict between a general and a special provision, the latter shall prevail (emphasis ours). The said principle has been stated in Craies on Statute Law 5th Edn., at p. 205, thus: The rule is, that whenever there is a particular enactment and a general enactment in the same statute and the latter, taken in its most comprehensive sense, would overrule the former, the particular enactment must be operative, and the general enactment must be taken to affect only the other parts of the statute to which it may properly apply. See also Public Prosecutor v. Chew Siew Luan [1982] CLJ 285 (Rep); [1982] CLJ 354; [1982] 2 MLJ 119.

Where one has a general provision, such as s.323 (1), on the one hand, and a specific provision, such as s. 213(3) which especially provides for a method of protecting exempted tenancies, then, generalibus specialia derogant".

A similar approach was also adopted by the Court of Appeal in Ramachandran Appalanaidu v Dato Bandar Kuala Lumpour [2012] 1 LNS 625 where the Court of Appeal applied the maxim generalibus specilia derogant in a case concerning the Federal Territory (Planning) Act 1982 ("FTPA"), which was a specific town planning law designed solely for Kuala Lumpur, with the Federation having executive authority over the whole of the FTPA, with the Town and Country Planning Act 1976 ("TCPA") and the is a general town and country planning law meant for the rest of Peninsular Malaysia, with the Federation having executive authority only over certain aspects as well as the Town and Country Planning (Amendment) Act 2001 ("Act A1129").

To surmise, the Court of Appeal in Ramachandran Appalanaidu (supra) in an attempt to harmonise the various Acts, applied the aforesaid maxim and held, "...where the provisions of Act A1129 are inconsistent with the provisions of the FTPA, the provisions of the FTPA must prevail. As has been mentioned above, the provisions of the FTPA are provisions of a town planning legislation designed specifically for Kuala Lumpur. In this context, we agree with the learned High Court Judge's application of the maxim "generalia specialibus non derogant ".

Thus, it is our judgment that the insolvency law i.e. the law on winding-up under the Companies Act 2016 must overrule CIPAA 2012 and be the operative enactment when it comes to any law on winding up. Accordingly, CIPAA borrowing the words of Subba Rao J in Commissioner of Income Tax v. Shahzada Nand & Sons AIR 1966 SC 1342, "must be taken to affect only the other parts of the statute to which it may properly apply."

There is also in the submissions before us by counsel for the Appellant a reference to Dubon Bhd (In Liquidation) v Wisma Cosway Management Corp [2020] 4 MLJ 288 which the Appellants claim supports that the principal of pari passu can only be displaced by clear and unambiguous statutory provisions.

It is however contended by the Respondent that Dubon Bhd (In Liquidation) (supra) is inapplicable to the present context as the latter case involves payment of 'outgoings and service charges' under section 77 of the Strata Management Act 2013 and is not a direct payment statutory provision.

The Federal Court in Dubon Bhd (In Liquidation) (supra) had held, "[24] The Companies Act 1965 (then) and the Companies Act 2016 now in force provide a comprehensive regime relating to the law of insolvency upon a company being wound up. These statutes contain similar statutory provisions in relation to the priority of payments due to secured and unsecured debtors in liquidation. ... [25] Section 292, which was applicable at the material time, provides that after the payment of preferential debts, the liquidator acts to safeguard the interests of the unsecured creditors. That in turn is ensured by the collection and distribution of the assets of the company pari passu amongst unsecured creditors (see Mosbert Berhad (in liquidation) v Stella D' Cruz [1985] 2 MLJ 446; [1985] 1 LNS 47 (FC)). [26] Any interpretation which seeks to dislodge these statutory provisions and settled principles of insolvency law cannot be supported. In essence the questions before us were:

(a)whether s 77 of the SMA dislodges or ousts the priority regime as set out in s 292 of the Companies Act 1965? and

(b)whether the SMA elevates the payment of the arrears of management fees to the status of a secured debt by reason of the term 'guaranteed' in the said section? [27] The simple answer to these two questions is that s 77 has no such effect. It neither dislodges the statutory priority regime in the Companies Act nor elevates the payment of management fees to the status of a secured debt.

Although Dubon Bhd (In Liquidation) (supra) was a case concerning the applicability of section 77 of the Strata Management Act 2013, we have after carefully considering the said Apex Court's decision, hold that the applicability of the general principle of law in that case that the settled principles of insolvency law cannot be dislodged by any other statutory interpretation with regards the payment of preferential debts, which in our case being section 30 of CIPAA, can be similarly applied herein in the appeal before us and the decision therein must be upheld.

We therefore hold that in light of the authorities we have referred to above, s 30 CIPAA cannot per se dislodge the statutory regime in the Companies Act vis a vis the settled principles of insolvency law.

It is also our decision that the direct payment under s 30 CIPAA, albeit a statutory obligation, does not make the same a secured debt under the Companies Act or give any priority to the party who is obliged to make a payment under s 30 CIPAA, where we respectfully adopt the passage in Dubon Bhd (In Liquidation) (supra), albeit now in the context of section 30 of CIPAA, where the Federal Court stated, [9] We heard this appeal on 5 November 2019, unanimously allowed it, and set aside the decision of the Court of Appeal. We answered the leave question in the negative, meaning that s 77 of the SMA does not accord any form of priority or preference in relation to payments received by a MC from an insolvent parcel proprietor."

We also wish to point out that a reading of section 30 of CIPAA does not expressly state that it will or can override any other legal obligations imposed under any other law and in particular under the provisions of the law pertaining to 'undue preference' under the winding-up provisions in the Companies Act 2016.

As such as there are no clear and unambiguous statutory provisions in s 30 CIPAA which allow for the dislodging of the pari passu principal. We accordingly hold that the law pertaining to 'undue preference' under winding up in the Companies Act 2016 is not displaced in the circumstances before us.

It is settled law that the test for appellate intervention is the plainly wrong test as reiterated in Government of Malaysia v Mahawira Sdn Bhd & Anor (2021) 4 MLRA 194.

Whereas the Federal Court in Tengku Dato Ibrahim Petra bin Tengku Indra Petra v Petra Perdana Bhd & Anor Appeal [2018] 1 MLRA 263 described identifiable errors of law as "...some other identifiable error such as a material error of law or the making of a critical factual finding which had no basis in the evidence...”

As we have found that there are no monies due and payable by the Appellant to MPM, the section 30 of CIPAA claim has to be dismissed. Section 30 cannot be invoked where there is no money due and payable by an employer to the contractor as in the case before us. We refer to JDI Builtech (M) Sdn Bhd v Danga Ked Development Malaysia Sdn Bhd (previously known as Greenland Danga Bay Sdn Bhd) [2024] 4 MLJ 29 where this Court of Appeal had held amongst others, "...that there must first be established that there is a certain sum of money due or payable by the principal to its main contractor."

Accordingly, we unanimously allow both the appeals and the decisions of the High Court are hereby set aside. We award the agreed costs of RM 20,000.00 collectively to the Appellants subject to allocatur. Dated: 13 May 2026 (NADZARIN WOK NORDIN) Judge Court of Appeal Malaysia Putrajaya Parties Appearing For the Appellant: Sanjay Mohan Wong Li Wei Tan Jia Shen [Messrs. Christopher & Lee Ong] For the Respondent: Lam Wai Loon Pan Yang Teng [Messrs. Harold & Lam Partnership]