Kuddus Construction Sdn Bhd v Heng Guan Soon Piling & Construction Sdn Bhd (JA-24C-9-09/2021)

Akta Pembayaran dan Adjudikasi Industri Pembinaan 2012 Dan Dalam Perkara Aturan 69A dan Aturan 92 Kaedah 4 Kaedah-Kaedah Mahkamah 2012 S/N jbYa5ex8EkewNYe2Qv83dg [JA-24C-9-09-2021] February 28, 2023 Before The Honourable Judicial Commissioner Ahmad Murad Bin Abdul Aziz 2 BETWEEN KUDDUS CONSTRUCTION SDN BHD [Company No.: 200701016341(774348-X)] … PLAINTIFF AND HENG GUAN SOON PILING & CONSTRUCTION SDN BHD [COMPANY NO.: 200001024283(526891-T)] … DEFENDANT S/N jbYa5ex8EkewNYe2Qv83dg [JA-24C-9-09-2021] February 28, 2023 Before The Honourable Judicial Commissioner Ahmad Murad Bin Abdul Aziz 3 JUDGMENT (ENCLOSURE 1) INTRODUCTION [1] This is the Plaintiff’s application in Enclosure 1 for an order to set aside the Adjudication Decision dated 23.07.2021 (“the Adjudication Decision”) in favour of the Defendant and for other consequential orders. [2] The grounds given by the Plaintiff in support of its application are:

The Adjudication Decision was improperly procured through fraud

(ii) Denial of natural justice to the Plaintiff and/or

(iii) The Adjudicator had acted in excess of her jurisdiction The above grounds are prescribed by Section 15 of the Construction Industry Payment and Adjudication Act 2012 (“CIPAA”), in particular Section 15 (a), (b) and (d). BACKGROUND FACTS [3] The Plaintiff was appointed by the Developer, MZN Holding Sdn Bhd, as the main contractor of the project to construct thirty-five (35) units of double storey houses (20’x70’) Type A at Mukim Sedili Besar, Johor (“the Project”). [4] The Plaintiff, thereafter, appointed the Defendant as its sub-contractor to carry out the piling works of the Project (“the Piling Works”), pursuant to a Letter of Award dated 19.06.2020 (“the Letter of Award”), based on: i. Fixed rates; with ii. Provisional quantities subject to premeasurement of the Piling Works carried out. [5] The Defendant avers that the Piling Works were duly carried out and completed by the Defendant on 04.09.2020, as supervised and verified by the Plaintiff, without any issues raised by the Plaintiff at all material times. The lack of any issues with respect to the completion of the Piling Works was reflected clearly in all the Piling Records signed and stamped by the Plaintiff (“the Piling Records”). S/N jbYa5ex8EkewNYe2Qv83dg [JA-24C-9-09-2021] February 28, 2023 Before The Honourable Judicial Commissioner Ahmad Murad Bin Abdul Aziz 4 [6] Although the Piling Works had been duly completed, the Plaintiff failed to pay the amount due and owing to the Defendant. [7] The Plaintiff, on the other hand, avers that the Defendant failed to comply with the instructions given by the Architect and Engineer named in the Agreement (“the Architect and Engineer’s instructions”), which resulted in a stop work order being issued to the Plaintiff by the Plaintiff’s employer. The Plaintiff alleges that consequent to the stop work order, the interim certificates were not certified by the named Architect and Engineer. [8] The Plaintiff, consequently, withheld payment to the Defendant and informed the Defendant of its decision by a letter dated 05.05.2021. The Defendant disagreed with the Plaintiff’s contention and commenced adjudication proceeding against the Plaintiff. The Defendant then obtained an Adjudication Decision in its favour. [9] The Plaintiff, aggrieved by the decision, filed the following:

Writ Summons No. JA-B52C-4-09/2021 against the Defendant for final determination of the dispute; (“Writ Action”);

This application via Originating Summons No. JA-24C-9-09/2021 to set aside the Adjudication Decision (“Setting Aside Application”); and

Notice of application to stay the enforcement of the Adjudication Decision; (“Stay Application”). [10] After obtaining the Adjudication Decision, the Defendant then served a Winding Up Notice, dated 10.09.2021, on the Plaintiff pursuant to Sections 465 (1) (e) and 466 (1) (a) of the Companies Act 2016, demanding settlement within twenty-one (21) days (“the Winding Up Notice”). [11] Upon receiving the Winding Up Notice, the Plaintiff then filed Originating Summons No. JA-24NCVC-587-09/2021 for a Fortuna Injunction against the Defendants, to restrain the Defendant from filing and serving a Winding Up Petition against the Plaintiff based on the Adjudication Decision. After hearing the parties, I dismissed the Plaintiff’s application for a Fortuna Injunction with costs of RM4,000.00. S/N jbYa5ex8EkewNYe2Qv83dg [JA-24C-9-09-2021] February 28, 2023 Before The Honourable Judicial Commissioner Ahmad Murad Bin Abdul Aziz 5 WHETHER THE SAID ADJUDICATION

(AD) WAS IMPROPERLY PROCURED THROUGH FRAUD [12] The Plaintiff submits in paragraph 4.15 of its written submission that the Adjudicator had relied on the interim certificates and Piling Records (see paragraph 5 above) and made a finding that all the Defendants work was done, supervised and duly endorsed by authorised personnel of the Plaintiff. The Piling Records were treated by the Adjudicator as inspection forms that were duly verified and endorsed by the Plaintiff. The Plaintiff avers that the Defendant had committed a fraud by making a claim based on the Piling Records that were signed by someone not authorised by the Plaintiff. [13] Paragraph 4.16 of the Plaintiffs written submission states: “Thus, the Plaintiff submits that the Plaintiff has successfully proven that fraud has been committed by the Plaintiff (should read as the Defendant) and the fraud committed have a direct impact on the said A.D. The requirement stated in the case of Gumi Asli Electrical Sdn Bhd v Dazzling Electrical (M) (2020) MLJ 2 314 has been fulfilled and the said A.D. was improperly procured by fraud and ought to be set aside under section 15 (a) of CIPAA.” [14] This Court finds that the above submission by the Plaintiff is misconceived for the reason that the fraud alleged by the Plaintiff, due to the Piling Records were not being signed by an authorised person, relates to the merits of the claim and does not relate to any fraud in procuring the A.D. as envisaged by section 15 (a) of CIPAA. [15] This Court agrees with the Defendant’s submission, which are as follows: It is clear that the Plaintiff has misread or misunderstood the decision in the Gumi Asli case above. The Gumi Asli case can be easily distinguished from the present case. The Gumi Asli case involves allegation of misrepresentation with respect to the withdrawal of the adjudication between the parties, which was not established to be a fraud involving the adjudication process. The court clearly distinguished between an alleged fraud involving the procurement of the A.D. and alleged fraud involving the merits of the claim. The court then went on to hold as follows: S/N jbYa5ex8EkewNYe2Qv83dg [JA-24C-9-09-2021] February 28, 2023 Before The Honourable Judicial Commissioner Ahmad Murad Bin Abdul Aziz 6 “16(7) even if fraud had been committed in the case, Gumi had failed to prove that the A.D. had been improperly procured through fraud.” WHETHER THERE WAS A BREACH OF NATURAL JUSTICE [16] The Plaintiff submits that there was a breach of natural justice by the Adjudicator in arriving at her decision for the following reasons:

The Adjudicator completely disregarded the fact that the Piling Record was not approved and signed by an authorised person and the fact that the Engineer or Architect had not approved or certified the interim certificates.

(ii) At paragraph 4.22 of its submission, the Plaintiff states (verbatim): “If one were to look at paragraph 51 to 68 of the A.D. itself. It is clear that the Adjudicator took the view that there are lots of dispute of facts and lack of evidence from the Plaintiffs side. The Adjudicator never called for any further documents or explanation from the Plaintiff as to why the Plaintiff pleaded that there was no proof of the work done by the Defendant. The Adjudicator simply accept the Piling Records as the valid proof that shows the Plaintiff had verified the Defendant’s work.”

(iii) The Adjudicator totally ignored the defence of the Plaintiff that no joint inspection or final measurement was carried out for the work done by the Defendant. [17] In support of its submission, the Plaintiff, referred to the decision of the Court of Appeal (COA) in View Esteem Sdn Bhd v Bina Puri Holdings

MLJU 1852, where it was held: “(64) It follows that the duty and obligations of the adjudicator as spelt out in Section 24 (c) of the CIPAA that he ‘shall comply with the principal of natural justice,’ would obliged him to consider all the defences raised by the appellant in its adjudication response as a matter of fairness and impartiality”. [18] The Plaintiff submits that the defective Piling Records and absence of a joint inspection or remeasurement are decisive issues or of considerable potential importance that should have been assessed by the Adjudicator. S/N jbYa5ex8EkewNYe2Qv83dg [JA-24C-9-09-2021] February 28, 2023 Before The Honourable Judicial Commissioner Ahmad Murad Bin Abdul Aziz 7 However, the Adjudicator failed to consider all these and the Plaintiff was not given a chance to tender further evidence or submissions on those issues. Thus, the Plaintiff submits that there was a breach of natural justice and the said Adjudication Decision ought to be set aside under Section 15(b) CIPAA 2012. [19] In response the Defendant states that the Plaintiffs submission is misconceived for the following reasons:

The Plaintiffs allegation that the Piling Records were not approved or signed by the authorised person was never raised in the adjudication proceedings by the Plaintiff. The Adjudicator cannot be faulted for not considering matters which were never raised before her in the adjudication proceedings.

(ii) As for the Plaintiff’s submissions (in paragraph 4.19 of the Hujahan Bertulis Plaintiff) that “the Adjudicator completely disregarded the fact that the engineer or the architect had not approved or certified the interim certificate”, this is also not true as the Adjudicator clearly considered it and held in the Adjudication Decision that: “60 Accordingly, based on the Interim Certificate Nos. 1 and 2, the Claimant’s (Defendant herein) Work had been evaluated and/or certified by the Respondent (Plaintiff herein). Given that this Contract is not subjected to a mutantis mutandis arrangement, i.e. back to back provision, and there is no requirement for the certification to be carried out by the Architect, the Architect play no role in this contract between the claimant and the Respondent.”

(iii) As such, paragraphs 4.19 to 4.25 of the Hujahan Bertulis Plaintif, relating to the merits of the claim are to be addressed in arbitration or by the Court, dealing with the substantive claim and defences subsequently, and not in the Originating Summons.

(iv) The rule of natural justice merely requires the party to be accorded due process, as explained in the Court of Appeal’s decision in Martego Sdn Bhd v Arkitek Meor & Chew Sdn Bhd under civil Appeal No. W-02(C)(A)-1496-08/2016 (decision affirmed by the Federal Court): “26. As for the complaint that there had been a breach of natural justice, we fully agree with the view of the learned Judge for the simple reason that CIPAA 2012 does not demand a certain method of process of adjudication. The main S/N jbYa5ex8EkewNYe2Qv83dg [JA-24C-9-09-2021] February 28, 2023 Before The Honourable Judicial Commissioner Ahmad Murad Bin Abdul Aziz 8 requirement is simply that both sides are accorded the opportunity to advance its case be it by way of written submissions or by hearing oral evidence. That is the choice for the adjudicator to make.” The Plaintiff was duly accorded, this via the filing of the Plaintiff’s Adjudication Response, which was duly considered by the Adjudicator in arriving at the Adjudication Decision.

The fact that the Adjudication Decision was not in the Plaintiff’s favour, does not mean that the Adjudicator completely disregarded the Plaintiff’s position; it only means that the Adjudicator did not agree with the Plaintiff’s position, and this is not tantamount to a jurisdictional error on the part of the Adjudicator. I am in agreement with the Defendant’s submissions on this issue. WHETHER THE ADJUDICATOR ACTED WITHIN HER JURISDICTION [20] In its submission on this issue, (see paragraph 4.26 to 4.29 of its submission) the Plaintiff again challenges the Adjudicator’s decision on its merits. As submitted by the Defendant, however, the fact that the Adjudicator did not agree with or accept the Plaintiffs position in the adjudication proceedings does not mean that the Adjudicator had acted in excess of her jurisdiction. [21] Reiterating again the legal position enunciated in the Court of Appeal’s case of Martego Sdn Bhd v Arkitek Meor & Chew Sdn Bhd under Civil Appeal No. W-02(C)(A)-1496-08/2016 (which decision was affirmed by the Federal Court), “55. The Court’s power to set aside adjudicator’s decision is circumscribed by statute in section 15 CIPAA 2012 and it is not a provision which allows the Courts to sit in an appellate jurisdiction. The grounds which the Courts can rely on to set aside the adjudicator’s decision are limited such that the Courts are not allowed to look into the merits of parties’ case. The Courts’s prima face duty must be to uphold the adjudicator’s decision and not to look at it with a fine-tooth comb with the aim to find the faults in the adjudicator’s decision. As long as the learned adjudicator had approached his task by adhering to the due process of his adjudication, the Courts will not interfere. Only with this approach by the Courts, will the aim of CIPAA 2012 of providing a regime to alleviate the cash problem faced by contractors in the building industry be addressed and achieved.” S/N jbYa5ex8EkewNYe2Qv83dg [JA-24C-9-09-2021] February 28, 2023 Before The Honourable Judicial Commissioner Ahmad Murad Bin Abdul Aziz 9 [22] For the reasons aforesaid I dismiss the Plaintiff’s application in Enclosure 1 with costs of RM3,000.00. Since I have dismissed Enclosure 1, it follows that Enclosure 4 will likewise fall and is hereby dismissed. Dated 28th February 2023 …………t.t…………….. Ahmad Murad Bin Abdul Aziz Judicial Commissioner High Court of Malaya Johor Bahru Johor Darul Ta’zim Solicitors: For the Plaintiff : Mr Palani & Ms Siow Chiang Yao Tetuan Palani Aishah & Co 1st Floor, Unit A, Wisma Alma 2-4, Jalan Manau Off Jalan Kg. Attap 50460 KUALA LUMPUR Wilayah Persekutuan For the Defendant: Mr CM Yeo & Ms Kanaga Ambigy Tetuan Halim Hong & Quek A-2-23 & A-3-23, Block A, Pusat Komersial Bayu Tasik Persiaran Southkey 1 Kota Southkey 80150 JOHOR BAHRU Johor S/N jbYa5ex8EkewNYe2Qv83dg [JA-24C-9-09-2021] February 28, 2023 Before The Honourable Judicial Commissioner Ahmad Murad Bin Abdul Aziz 10 Cases Referred to: ➢ Gumi Asli Electrical Sdn Bhd v Dazzling Electrical (M) (2020) MLJ 2 314 ➢ View Esteem Sdn Bhd v Bina Puri Holdings (2010) MLJU 1852 ➢ Martego Sdn Bhd v Arkitek Meor & Chew Sdn Bhd under Civil Appeal No. W-02(C)(A)-1496-08/2016 (which decision was affirmed by the Federal Court) Legislation Referred to: ➢ Section 15 of the Construction Industry Payment and Adjudication Act 2012 ➢ Order 69A of the Rules of Court 2012 ➢ Order 92 of the Rules of Court 2012 Hearing Date : 06.01.2022 Decision Date : 12.09.2022 S/N jbYa5ex8EkewNYe2Qv83dg