Kwsl Builders Sdn Bhd v Mudajaya Corporation Berhad (BA-24C-23-04/2022)

This judgment concerns the following four originating summonses (4 OS):

Mudajaya Corporation Sdn. Bhd. (MCB) has filed OS no. BA-24C-9- 01/2022 (OS No. 9) against KWSL Builders Sdn. Bhd. (KSWL) for the following orders -

an order to set aside an adjudication decision made on 19.1.2022 [Adjudication

9)] by an adjudicator, Dr. Wendy Ooi Su Ghee [Adjudicator (OS No. 9)], in favour of KWSL against MCB [Setting Aside Application (OS No. 9)]; and

if the Setting Aside Application (OS No. 9) is dismissed, an order to stay the enforcement of the Adjudication Decision (OS S/N b9TtfyYNwkmqYiiRP2kjiQ No. 9) [Stay Application (OS No. 9)] pending the disposal of a suit filed by MCB against KWSL (MCB’s Suit). On 11.9.2020, MCB’s Suit was initially filed in Kuala Lumpur High Court (KL HC) Civil Suit no. WA-22C-88-09/2020. By an order of KL HC, MCB’s Suit had been transferred from KL HC to the Ipoh High Court (Civil Suit no. AA-22C-1-09/2021);

OS no. BA-24C-13-02/2022 (Enforcement OS No. 13) has been filed by KWSL against MCB for leave of court to enforce the Adjudication Decision (OS No. 9);

MCB has filed against KWSL OS no. BA-24C-20-03/2022 (OS No. 20) for the following orders -

an order to set aside an adjudication decision made on 2.3.2022 [Adjudication Decision (OS No. 20)] by Mr. Raja Kumar Raja Kandan [Adjudicator (OS No. 20)], in favour of KWSL against MCB [Setting Aside Application (OS No. 20)]; and

if the court dismisses the Setting Aside Application (OS No. 20), an order to stay the enforcement of the Adjudication Decision (OS No. 20) [Stay Application (OS No. 20)] pending the outcome of MCB’s Suit; and

OS no. BA-24C-23-04/2022 (Enforcement OS No. 23) has been filed by KWSL against MCB for leave of court to enforce the Adjudication Decision (OS No. 20). S/N b9TtfyYNwkmqYiiRP2kjiQ 4 2. By consent of parties, OS No. 20 had been heard together with Enforcement OS No. 23. On 31.5.2022, I have decided as follows:

OS No. 20 was dismissed;

Enforcement OS No. 23 was allowed; and

one set of costs for OS No. 20 and Enforcement OS No. 23 shall be paid by MCB to KWSL [Court’s Decision (OS Nos. 20 and 23)].

OS No. 9 was heard together with Enforcement OS No. 13 (with the parties’ consent). This court delivers the following decision in these two OS on 21.6.2022:

OS No. 9 was refused;

I allowed Enforcement OS No. 13; and

MCB was ordered to pay to KWSL one set of costs for OS No. 9 and Enforcement OS No. 13 [Court’s Decision (OS Nos. 9 and 13)].

I have decided to deliver a single judgment for Court’s Decision (OS Nos. 20 and 23) and Court’s Decision (OS Nos. 9 and 13) due to the following reasons:

the 4 OS concerned sub-contract works for a project known as “Refinery and Petrochemical Integrated Development Project” in Pengerang, Johore (Project); S/N b9TtfyYNwkmqYiiRP2kjiQ

MCB’s learned counsel had raised issues in the Setting Aside Application (OS No. 20) which had also been advanced by the same learned counsel for MCB in the Setting Aside Application (OS No. 9). Such a course of action attracts the application of the second limb of res judicata doctrine, the issue estoppel principle; and

the Stay Application (OS No. 9) and Stay Application (OS No. 20) had applied to stay the enforcement of the Adjudication Decision (OS No. 9) and enforcement of the Adjudication Decision (OS No. 20) respectively pending the disposal of MCB’s Suit. B. Background 5. With regard to the Project, MCB had appointed KWSL to do sub-contract works as follows:

in “Letter of Award” (LA) dated 20.7.2016 [LA (Acoustic Elements Works)], MCB had appointed KWSL to supply and install “acoustic elements” in the Project (Acoustic Elements Works);

by way of LA dated 30.8.2016 [LA (Infrastructural Works)], MCB had appointed KWSL to supply and install reinforced concrete “U-Drain Capping Beam and Step-In Staircase” in Phases 2 and 3 of the Workers’ Village (Infrastructural Works);

KWSL was appointed by MCB in LA dated 18.10.2016 [LA (Walkway Works)] to supply and install reinforced concrete walkway for Phases 2 and 3 of “Workers’ Village” in the Project (Walkway Works); S/N b9TtfyYNwkmqYiiRP2kjiQ

in LA dated 31.10.2016 [LA (Architectural Works)], MCB had appointed KWSL to perform “architectural works” in respect of certain warehouses and workshops in the Project (Architectural Works); and

by way of a LA dated 28.3.2017 [LA (Manpower Supply)], MCB had appointed KWSL to supply manpower services for the Project (Manpower Supply). C. MCB’s Suit 6. In MCB’s Suit, MCB’s Statement of Claim has pleaded as follows, among others:

with regard to LA (Architectural Works) as follows -

MCB had paid a total sum of RM3,433,270.91 to KWLS for Architectural Works performed by KWSL;

KWSL had breached LA (Architectural Works) [KWSL’s Breach (Architectural Works)] and as a result of KWSL’s Breach (Architectural Works), MCB had incurred “back charges” totaling RM8,400,785.96 [MCB’s Back Charges (Architectural Works)]; and

in view of MCB’s Back Charges (Architectural Works), KWSL is liable to pay a sum of RM4,288,705.82 to MCB [MCB’s Claim (Architectural Works)];

in respect of LA (Acoustic Elements Works) - S/N b9TtfyYNwkmqYiiRP2kjiQ

there were Acoustic Elements Works which were not satisfactorily completed by KWSL. Hence, MCB had to carry out “additional works” for which MCB had issued a “debit note” for a sum of RM258,580.50 Debit Note (Acoustic Elements Works)];

taking into account MCB’s Debit Note (Acoustic Elements Works), MCB owed a sum of RM1,972,389.35 to KWSL [MCB’s Alleged Debt (Acoustic Elements Works)]; and

the following sums should be set off from MCB’s Alleged Debt (Acoustic Elements Works) -

MCB’s Claim (Architectural Works);

(ii) a “retention sum” in an amount of RM185,608.64 [Retention Sum (Architectural Works)] held by MCB under LA (Architectural Works); and

(iii) an amount of RM111,179.12 is held by MCB [Retention Sum (Acoustic Elements Works)] as a retention sum pursuant to LA (Acoustic Elements Works);

regarding Infrastructural Works and Walkway Works, MCB owes a total sum of RM525,098.10 to KWSL [MCB’s Alleged Debt (Infrastructural and Walkway Works)];

MCB had purchased materials and rented machineries and equipment on behalf of KWSL for which MCB had issued a debit S/N b9TtfyYNwkmqYiiRP2kjiQ note for an amount of RM2,446,600.09 Debit Note (Infrastructural and Walkway Works)];

after taking into account MCB’s Debit Note (Infrastructural and Walkway Works) and MCB’s deduction of a retention sum of RM85,751.33, KWSL owes a sum of RM49,679.37 to MCB [MCB’s Claim (Infrastructural and Walkway Works)];

MCB owes a total sum of RM610,633.30 to KWSL pursuant to LA (Manpower Supply) [MCB’s Alleged Debt (Manpower Supply)];

MCB claims a total sum of RM933,476,68 from KWSL [MCB’s Claim (Various Works)]. Details of MCB’s Claim (Various Works) are as follows - Item RM

MCB’s Claim (Architectural Works)

MCB’s Claim (Infrastructural and Walkway Works)

MCB’s Alleged Debt (Acoustic Elements Deduct S/N b9TtfyYNwkmqYiiRP2kjiQ Works)

Retention Sum (Architectural Works) Deduct

Retention Sum (Acoustic Elements Works) Deduct

MCB’s Alleged Debt (Infrastructural and Walkway Works) Deduct

MCB’s Alleged Debt (Manpower Supply) Deduct RM610,633.30 Total of MCB’s Claim (Various Works)

MCB claims for liquidated damages (LD) from KWSL a total of RM1,203,011.51 Claim

(LD)]. MCB’s Claim

is computed as follows -

there was a delay in the completion and handing over of Architectural Works from KWSL to MCB for which MCB was S/N b9TtfyYNwkmqYiiRP2kjiQ entitled to claim RM713,829.01 as LD under clause 7 LA (Architectural Works); and

as regards the delay in the completion and handing over of Acoustic Elements Works from KWSL to MCB, a total of RM489,182.50 is claimed as LD under clause 7 LA (Acoustic Elements Works). D. Adjudication Decision (OS No. 9)

After the filing of MCB’s Suit in KL HC, on 11.10.2021, KWSL served a “Payment Claim” (PC) on MCB for an amount of RM500,736.24 regarding MCB’s failure to pay KWSL pursuant to the LA (Walkway Works) [PC (Walkway Works)]. According to the PC (Walkway Works) -

MCB owed a sum of RM461,852.50 for Walkway Works which had been performed by KWSL; and

the second moiety of the retention sum in an amount of RM38,883.74 is due from MCB to KWSL.

MCB’s “Payment Response” (PR) to the PC (Walkway Works) was as follows:

MCB disputed the entire sum claimed in the PC (Walkway Works); and

the Walkway Works were related to the Acoustic Elements Works, Architectural Works and Infrastructural Works because all these works concerned the same Project. As such, MCB claimed from KWSL a total sum of RM5,541,396.70 (MCB’s Counterclaim). S/N b9TtfyYNwkmqYiiRP2kjiQ MCB’s Counterclaim consists of the following set-off and/or counterclaim by MCB against KWSL -

MCB’s Claim (Architectural Works) in a sum of RM4,288,705.82;

an amount of RM49,679.37 is due from KWSL to MCB - please refer to MCB’s Claim (Infrastructural and Walkway Works); and

MCB’s Claim (LD) in a sum of RM1,203,011.51.

KWSL’s “Adjudication Claim” (AC) was based on the PC (Walkway Works) while MCB’s “Adjudication Response” (AR) prayed for the following relief, among others, from the Adjudicator (OS No. 9):

a dismissal of the adjudication proceedings based on PC (Walkway Works) [Adjudication Proceedings (OS No. 9)]; and

KWSL to pay MCB’s Counterclaim with interest.

The Adjudication Decision (OS No. 9) was as follows, among others:

the Adjudicator (OS No. 9) allowed KWSL’s claim of RM500,736.24 [Adjudicated Amount (OS No. 9)] with interest and costs as stipulated in the Adjudication Decision (OS No. 9) - please refer to paragraphs 3.1 to 3.3 Adjudication Decision (OS No. 9); and

in paragraphs 4.13 and 4.14 Adjudication Decision (OS No. 9), the Adjudicator (OS No. 9) dismissed MCB’s Counterclaim. E. Adjudication Decision (OS No. 20) S/N b9TtfyYNwkmqYiiRP2kjiQ

Subsequent to the filing of MCB’s Suit in KL HC, on 11.10.2021, KWSL served a PC on MCB for a sum of RM490,881.76 regarding MCB’s failure to pay KWSL pursuant to the LA (Manpower Supply) [PC (Manpower Supply)].

MCB’s PR to the PC (Manpower Supply) was as follows:

MCB disputed the entire sum claimed in the PC (Manpower Supply); and

the Manpower Supply was related to the Acoustic Elements Works, Architectural Works and Infrastructural Works because the Manpower Supply and all these works were in respect of the same Project. Hence, MCB’s Counterclaim against KWSL for a total sum of RM5,541,396.70.

KWSL’s AC was premised on the PC (Manpower Supply). MCB’s AR prayed for the following remedies against KWSL, among others, from the Adjudicator (OS No. 20):

a dismissal of the adjudication proceedings based on the PC (Manpower Supply) [Adjudication Proceedings (OS No. 20)]; and

KWSL shall pay MCB’s Counterclaim with interest.

The Adjudication Decision (OS No. 20) was delivered as follows, among others:

in paragraphs 53 to 55 Adjudication Decision (OS No. 20), KWSL’s claim of RM490,881.76 [Adjudicated Amount (OS No. 20)] was S/N b9TtfyYNwkmqYiiRP2kjiQ allowed with interest and costs as stipulated in the Adjudication Decision (OS No. 20); and

the Adjudicator (OS No. 20) dismissed MCB’s Counterclaim - please refer to paragraphs 59 to 68 Adjudication Decision (OS No. 20). F.

Judicial approach With the consent of both parties, I adopt the following approach:

for OS No. 20 and Enforcement OS No. 23 -

the court will first decide the Setting Aside Application (OS No. 20);

after determining the Setting Aside Application (OS No. 20), the Stay Application (OS No. 20) will be considered; and

the Enforcement OS No. 23 will be decided last; and

the approach as explained in the above sub-paragraph (1), is applied for OS No. 9 and Enforcement OS No. 13. G.

Issues The following questions shall be determined in this judgment:

with regard to the Setting Aside Application (OS No. 20) -

whether the Adjudicator (OS No. 20) should have dismissed the Adjudication Proceedings (OS No. 20) solely on the ground that MCB’s Suit had already been filed. In this regard, can the court S/N b9TtfyYNwkmqYiiRP2kjiQ set aside the Adjudication Decision (OS No. 20) due to the prior commencement of MCB’s Suit? This novel issue discusses the effect of ss 5, 8, 9, 15 and 37 of the Construction Industry Payment and Adjudication Act 2012 (CIPAA);

could the Adjudicator (OS No. 20) dismiss the Adjudication Proceedings (OS No. 20) due to bad faith on KWSL’s part when the Adjudication Proceedings 20) had been commenced after the filing of MCB’s Suit? Similarly, whether the court can set aside the Adjudication Decision (OS No. 20) on the ground of KWSL’s mala fides;

were the Adjudication Proceedings (OS No. 20) contrary to the object of CIPAA [Object (CIPAA)]? Can the court set aside the Adjudication Decision (OS No. 20) on the ground that the Adjudication Proceedings (OS No. 20) were inconsistent with the Object (CIPAA)?;

could MCB oppose the Adjudication Proceedings (OS No. 20) by relying on construction contracts which are distinct from the LA (Manpower Supply)? This novel question concerns an interpretation of ss 6(2), 10(1) and 27(1) CIPAA. I will take this opportunity to discuss whether a respondent in an adjudication proceedings may counterclaim from a claimant in the adjudication proceedings regarding any tort allegedly committed by the claimant in respect of the construction work which forms the basis of the claim in the adjudication proceedings; S/N b9TtfyYNwkmqYiiRP2kjiQ

whether MCB could counterclaim from KWSL in the Adjudication Proceedings (OS No. 20) for a sum which exceeded the amount claimed by KWSL in the Adjudication Proceedings (OS No. 20);

did KWSL commit tort of abuse of court process by filing the Adjudication Proceedings (OS No. 20) against MCB?; and

did the Adjudicator (OS No. 20) breach the second rule of natural justice (2nd Rule) under s 15(b) read with s 24(c) CIPAA by not attaching “proper weight” to MCB’s submission made in the Adjudication Proceedings (OS No. 20)?;

if the court dismisses the Setting Aside Application (OS No. 20), should the court exercise its discretion under s 16(1)(b) CIPAA to allow the Stay Application (OS No. 20)? In the determination of this issue, can the court apply the “special circumstances” test regarding the court’s discretionary power to stay the execution of a judgment or order (Judgment/Order) pending the disposal of an appeal against the Judgment/Order (Special Circumstances Test);

whether the court should allow the Enforcement OS No. 23 pursuant to s 28(1) and (2) CIPAA;

in respect of the Setting Aside Application (OS No. 9) -

is MCB barred by issue estoppel principle from advancing the same contentions which have been previously rejected by the court in the Setting Aside Application (OS No. 20)? This is a novel issue; and S/N b9TtfyYNwkmqYiiRP2kjiQ

whether the Adjudicator (OS No. 9) had breached the 2nd Rule in respect of the Adjudication Decision (OS No. 9);

if the Setting Aside Application (OS No. 9) is refused, should the Stay Application (OS No. 9) be allowed by the court? and

whether the court should allow the Enforcement OS No. 13. H. Setting Aside Application (OS No. 20) H(1). Whether Adjudication Proceedings (OS No. 20) and Adjudication Decision (OS No. 20) should be set aside solely because of earlier filing of MCB’s Suit

Sections 5, 8, 9, 15 and 37 CIPAA provide as follows: “Payment claim s 5(1) An unpaid party may serve a payment claim on a non-paying party for payment pursuant to a construction contract.

The payment claim shall be in writing and shall include -

the amount claimed and due date for payment of the amount claimed;

details to identify the cause of action including the provision in the construction contract to which the payment relates;

description of the work or services to which the payment relates; and

a statement that it is made under [CIPAA]. Initiation of Adjudication S/N b9TtfyYNwkmqYiiRP2kjiQ s 8 (1) A claimant may initiate adjudication proceedings by serving a written notice of adjudication containing the nature and description of the dispute and the remedy sought together with any supporting document on the respondent.

Upon receipt by the respondent of the notice of adjudication, an adjudicator shall be appointed in the manner described in section 21.

A party to the adjudication proceedings may represent himself or be represented by any representative appointed by the party. Adjudication claim s 9(1) The claimant shall, within ten working days from the receipt of the acceptance of appointment by the adjudicator under subsection 22(2) or 23(2), serve a written adjudication claim containing the nature and description of the dispute and the remedy sought together with any supporting document on the respondent.

The claimant shall provide the adjudicator with a copy of the adjudication claim together with any supporting document within the time period specified under subsection (1). Improperly procured adjudication decision s 15 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;

the adjudicator has not acted independently or impartially; or

the adjudicator has acted in excess of his jurisdiction. S/N b9TtfyYNwkmqYiiRP2kjiQ Relationship between adjudication and other dispute resolution process s 37(1) A dispute in respect of payment under a construction contract may be referred concurrently to adjudication, arbitration or the court.

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

An adjudication proceeding is terminated if the dispute being adjudicated is settled by agreement in writing between the parties or decided by arbitration or the court.” (emphasis added).

MCB’s learned counsel has submitted that the Adjudicator (OS No. 20) should have dismissed the Adjudication Proceedings (OS No. 20) solely on the ground that MCB’s Suit had already been filed. According to MCB’s learned counsel, the court should set aside the Adjudication Decision (OS No. 20) on the same ground.

I am not able to accept the above contentions due to the following reasons:

there is nothing in ss 5, 8, 9, 37 and any other provision in CIPAA which prohibit a claimant from commencing adjudication proceedings after the commencement of litigation or arbitration, whichever the case may be (Litigation/Arbitration);

if Parliament had intended to prohibit the institution of any adjudication proceedings under CIPAA upon the commencement of S/N b9TtfyYNwkmqYiiRP2kjiQ Litigation/Arbitration, the legislature would have expressly provided for such a prohibition in ss 5, 8, 9, 37 or any other provision in CIPAA. However, Parliament has deliberately chosen not to do so;

the words in s 37(1) CIPAA (A dispute in respect of payment under a construction contract may be referred concurrently to adjudication, arbitration or the court) clearly allow adjudication proceedings to be conducted “concurrently” with Litigation/Arbitration. Furthermore, by reason of s 37(3) CIPAA, an adjudication proceeding can only be “terminated” in any one of the following two circumstances, namely, if the dispute being adjudicated is -

settled by the parties’ written agreement; or

decided in the Litigation/Arbitration. If I have acceded to the above submission by MCB’s learned counsel, this would have rendered nugatory the clear words in s 37(1) and (3) CIPAA;

the Object (CIPAA) is to ensure that parties who have performed construction work are not deprived of cash flow (the life-blood of the construction industry) - please see the Long Title to CIPAA (CIPAA is to “facilitate regular and timely payment, to provide a mechanism for speedy dispute resolution through adjudication, to provide for remedies for the recovery of payment in the construction industry”) and the judgment of the Federal Court delivered by Mohd. Zawawi Salleh FCJ in Martego Sdn Bhd v Arkitek Meor & Chew Sdn Bhd and another appeal [2019] 5 AMR 516, at [51]. S/N b9TtfyYNwkmqYiiRP2kjiQ If this court has decided that a party who has performed construction work (X), cannot commence adjudication proceedings under CIPAA to claim for payment for construction work after the institution of Litigation/Arbitration, such a decision does not assist X’s cash flow and is inconsistent with the Object (CIPAA); and

the following appellate cases support the above decision -

it is decided in Martego, at [78], as follows - “[78] Further, s 37 [CIPAA] provides that an adjudication proceeding, arbitration and court litigation may proceed concurrently and in parallel. …” (emphasis added); and

in Inai Kiara Sdn Bhd v Puteri Nusantara Sdn Bhd [2019] 2 MLJ 362, at [38], Mary Lim Thiam Suan JCA (as she then was) has delivered the following judgment of the Court of Appeal - “[38] Where the parties resolve the payment dispute by abiding by the terms of the adjudication decision and there is payment of the sum adjudicated, the matter ends. That resolution is, at least, for the interim period until final determination by arbitration or litigation, or where the subject matter of the decision has been settled by written agreement between the parties. As is frequently pointed out, parties may run other dispute resolution processes concurrently with adjudication. This is clearly provided under ss 31 and 37 [CIPAA] …” (emphasis added). S/N b9TtfyYNwkmqYiiRP2kjiQ

As KWSL could commence the Adjudication Proceedings (OS No. 20) after the institution of MCB’s Suit (please refer to the above paragraph 19), this court cannot set aside the Adjudication Decision (OS No. 20) merely on the ground that the Adjudication Proceedings (OS No. 20) had been commenced after the filing of MCB’s Suit. There is a second reason for this decision. Paragraphs (a) to (d) in s 15 CIPAA do not provide any ground for the court to set aside an adjudication decision solely on the ground that the adjudication decision emanates from adjudication proceedings which have been commenced after the institution of Litigation/Arbitration. H(2). Can MCB set aside Adjudication Proceedings (OS No. 20) and Adjudication Decision (OS No. 20) due to KWSL’s mala fides?

MCB’s learned counsel has made a far-reaching submission. According to MCB’s learned counsel, KWSL was guilty of bad faith by commencing Adjudication Proceedings (OS No. 20) after the filing of MCB’s Suit (Alleged KWSL’s Mala Fides). Hence, the Adjudicator (OS No. 20) should have dismissed the Adjudication Proceedings (OS No. 20) due to the Alleged KWSL’s Mala Fides and upon the refusal of the Adjudicator (OS No. 20) to do so, the court should set aside the Adjudication Decision (OS No. 20) on this ground.

Firstly, the fact that KWSL had commenced Adjudication Proceedings (OS No. 20) after the institution of MCB’s Suit, did not constitute any proof of bad faith on the part of KWSL. This is because KWSL had a statutory right to commence Adjudication Proceedings (OS No. 20) under ss 5, 8 and 9 CIPAA [Statutory Right (CIPAA)]. The exercise of the S/N b9TtfyYNwkmqYiiRP2kjiQ Statutory Right (CIPAA) cannot be tantamount to proof of mala fides. Accordingly, the Adjudicator (OS No. 20) did not err in rejecting the Alleged KWSL’s Mala Fides. In any event, KWSL’s intention, motive, good faith or bad faith in commencing Adjudication Proceedings (OS No. 20) is irrelevant. It is decided in High Rise Millenium Sdn Bhd v Pelangi Hartajaya Sdn Bhd, Shah Alam High Court Originating Summons no. BA-24C-48-08/2021 and another case, at [26], as follows: “[26] PH’s learned counsel has contended that HRM’s claim for the Uncertified Sum was made in bad faith because such a claim (with the necessary details and particulars) should have been furnished by HRM to the Project Architect in accordance with Clause 30.2 (so as to enable the Project Architect to decide to issue an IC regarding such a claim). I cannot accept this submission. Firstly, as explained in the above sub-paragraph 25(2)(a), the Adjudicator had the power under s 12(1) read with s 25(n) CIPAA to decide on the Adjudicated Uncertified Sum. Once the Adjudicator had such a power, it is immaterial what was HRM’s intention, motive, bona fides or mala fides.” (emphasis added).

Paragraphs (a) to (d) in s 15 CIPAA do not empower the court to set aside the Adjudication Decision (OS No. 20) due to the Alleged KWSL’s Mala Fides. Hence, the court has no power under s 15(a) to (d) CIPAA to set aside the Adjudication Decision (OS No. 20) premised on the Alleged KWSL’s Mala Fides. H(3). Whether Adjudication Proceedings (OS No. 20) were contrary to Object (CIPAA) S/N b9TtfyYNwkmqYiiRP2kjiQ

As explained in the above sub-paragraph 19(4), KWSL’s commencement of the Adjudication Proceedings (OS No. 20) was consistent with the Object (CIPAA). As such, I have no hesitation to reject the contention by MCB’s learned counsel that the Adjudication Proceedings (OS No. 20) were contrary to the Object (CIPAA). This court cannot therefore set aside the Adjudication Decision (OS No. 20) on the spurious ground that the Adjudication Proceedings (OS No. 20) were inconsistent with the Object (CIPAA). H(4). Could MCB set off and/or counterclaim based on contracts which were not subject matter of Adjudication Proceedings (OS No. 20)?

Sections 6, 10 and 27 CIPAA state as follows: “Payment response s 6(1) A non-paying party who admits to the payment claim served on him shall serve a payment response on the unpaid party together with the whole amount claimed or any amount as admitted by him.

A non-paying party who disputes the amount claimed in the payment claim, either wholly or partly, shall serve a payment response in writing on the unpaid party stating the amount disputed and the reason for the dispute.

A payment response issued under subsection (1) or (2) shall be served on the unpaid party within ten working days of the receipt of the payment claim.

A non-paying party who fails to respond to a payment claim in the manner provided under this section is deemed to have disputed the entire payment claim. Adjudication response S/N b9TtfyYNwkmqYiiRP2kjiQ s 10(1) The respondent shall, within ten working days from the receipt of the adjudication claim under subsection 9(1), serve a written adjudication response which shall answer the adjudication claim together with any supporting document on the claimant.

The respondent shall provide the adjudicator with a copy of the adjudication response together with any supporting document within the time specified under subsection (1).

If the respondent fails to serve any adjudication response, the claimant may proceed with the adjudication after the expiry of the time specified under subsection (1). Jurisdiction of adjudicator s 27(1) Subject to subsection (2), the adjudicator’s jurisdiction in relation to any dispute is limited to the matter referred to adjudication by the parties pursuant to sections 5 and 6.

The parties to adjudication may at any time by agreement in writing extend the jurisdiction of the adjudicator to decide on any other matter not referred to the adjudicator pursuant to sections 5 and 6.

Notwithstanding a jurisdictional challenge, the adjudicator may in his discretion proceed and complete the adjudication proceedings without prejudice to the rights of any party to apply to set aside the adjudication decision under section 15 or to oppose the application to enforce the adjudication decision under section 28(1).” (emphasis added).

The Adjudication Proceedings (OS No. 20) were based on the LA (Manpower Supply). MCB’s learned counsel had however opposed the Adjudication Proceedings 20) by raising set-off and/or S/N b9TtfyYNwkmqYiiRP2kjiQ counterclaim based on the following contracts which were not the subject matter of KWSL’s claim in the Adjudication Proceedings (OS No. 20):

MCB’s Claim (Architectural Works) in a sum of RM4,288,705.82 was premised on the LA (Architectural Works);

MCB’s Claim (Infrastructural and Walkway Works) totaling RM49,679.37 was made pursuant to contracts which were distinct from the LA (Manpower Supply); and

MCB’s Claim (LD) for an amount of RM1,203,011.51 was based on clause 7 LA (Architectural Works) and clause 7 LA (Acoustic Elements Works).

When a claimant (Y) commences adjudication proceedings under CIPAA for payment due to Y [Y’s Claim (Contract Y-Z)] from the respondent (Z) for construction work performed by Y under a particular construction contract between Y and Z [Contract (Y-Z)], I am of the opinion that Z cannot resist Y’s Claim (Contract Y-Z) by -

raising a set-off and/or counterclaim based on other contracts between Y and Z [Other Contracts (Y-Z)]; and

making any counterclaim against Y’s Claim (Contract Y-Z) based on any tort allegedly committed by Y with regard to the construction work in question (Alleged Y’s Tort). My view remains the same even though the Other Contracts (Y-Z) and/or Alleged Y’s Tort may concern the same construction project as that S/N b9TtfyYNwkmqYiiRP2kjiQ provided in Contract (Y-Z). The reasons for the above opinion are as follows:

in the Federal Court case of Ireka Engineering & Construction Sdn Bhd v PWC Corp Sdn Bhd and other appeals [2020] 1 MLJ 311, at [34] to [36], Idrus Harun FCJ has decided as follows - “[34] On the facts of the present case, it is an incontrovertible fact that the agreement dated 15 September 2009 in cl 13.1 provides the appellant with a right to the cross-contract set-offs and that the CIPAA came into force on 15 April 2014, approximately 3 1/2 years after the agreement was entered into by the appellant and the respondent. [35] In accordance with the bargain entered into between the parties, the appellant now seeks to apply for the cross-contract set-offs, a right which according to the appellant, they have acquired by virtue of cl 13.1 of the agreement. Clause 13.1 of the agreement is central to the issue for our determination and it stipulates as follows:

13.1 Notwithstanding any other provisions in the Sub-Contract, the main contractor shall be entitled to deduct from or set-off any money due or becoming due to the Sub-Contractor (including any Retention Money) any sum or sums which the Sub-Contractor is liable to pay the Main Contractor whether under this Sub-Contract or otherwise or any other contract between the parties. The point of relevance that can be discerned from the above mentioned clause is that the appellant clearly has a right of set-off for any cross-claim it has against the respondent. S/N b9TtfyYNwkmqYiiRP2kjiQ [36] However, in determining the validity of cl 13.1 of the agreement, the adjudicator, by relying on s 5 [CIPAA], declined to exercise jurisdiction over disputes arising out of contracts before two separate adjudicators for which they would be deciding. Both the High Court and subsequently the Court of Appeal saw nothing wrong in the adjudicator declining to exercise jurisdiction and had relied on the wordings of s 5 [CIPAA] in deciding that firstly, the section referred to a construction contract, secondly, they were only able to make determination on a single construction contract and thirdly, they were not empowered to decide on multiple construction contracts. The Court of Appeal in the 125 Appeal, in fact agreed with the learned High Court judge on His Lordship’s interpretation of the expression of ‘a construction contract’ in s 5 [CIPAA] when it held that this ‘is consistent with the rule of purposive interpretation found in s 14A of the Interpretation Acts 1948 and 1967 [Act 388]’. Following the decisions of the courts below us, the appellant cannot now rely on the cross-contract set-offs provision in respect of the outstanding sum.” (emphasis added). It is clear from the Federal Court’s judgment in Ireka Engineering & Construction that the wording of s 5(1) CIPAA (a construction contract) empowers an adjudicator to adjudicate solely on Y’s Claim (Contract Y-Z) and not on -

Z’s set off and/or counterclaim for any sum due from Y to Z pursuant to the Other Contracts (Y-Z) [Z’s Set-Off/Counterclaim (Other Contracts)]; and/or S/N b9TtfyYNwkmqYiiRP2kjiQ

(ii) Z’s counterclaim for any amount of money for which Y is liable to Z due to the Alleged Y’s Tort [Z’s Counterclaim (Alleged Y’s Tort)];

by reason of s 6(2) CIPAA, Z only has a statutory right to serve a PR which disputes Y’s Claim (Contract Y-Z) “either wholly or partly”. The words in s 6(2) CIPAA only allow Z to dispute Y’s Claim (Contract Y-Z) based on the provisions of Contract (Y-Z) which confer a right on Z to set off and/or counterclaim against Y under the Contract (Y-Z). The wording in 6(2) CIPAA does not allow Z’s PR to contain -

Z’s Set-Off/Counterclaim (Other Contracts); and

(ii) Z’s Counterclaim (Alleged Y’s Tort);

the narrow scope of s 6(2) CIPAA [as explained in the above sub-paragraph (b)] is contrasted with the wide ambit of O 15 r 2(1) of the Rules of Court 2012 (RC) which allows a defendant in a suit to counterclaim from the plaintiff “in respect of any matter (whenever and however arising)”. I reproduce below O 15 r 2(1) RC - “Counterclaim against plaintiff O 15 r 2(1) Subject to rule 5(2), a defendant in any action who alleges that he has any claim or is entitled to any relief or remedy against a plaintiff in the action in respect of any matter (whenever and however arising) may, instead of bringing a separate action, make a counterclaim in respect of that matter; and where he does so he shall add the counterclaim to his defence.” S/N b9TtfyYNwkmqYiiRP2kjiQ (emphasis added);

according to s 27(1) CIPAA, an adjudicator’s jurisdiction is “limited” to the matters referred to the adjudication by, among others, PR. Reading together ss 6(2) and 27(1) CIPAA, an adjudicator does not have jurisdiction to adjudicate on -

Z’s Set-Off/Counterclaim (Other Contracts); and

(ii) Z’s Counterclaim (Alleged Y’s Tort);

s 10(1) CIPAA only allows Z to serve an AR which “shall answer” Y’s AC [based on Y’s Claim (Contract Y-Z)]. Z has no right under s 10(1) CIPAA to serve an AR which contains -

Z’s Set-Off/Counterclaim (Other Contracts); and

(ii) Z’s Counterclaim (Alleged Y’s Tort); and

I have decided as follows in Integral Acres Sdn Bhd v BCEG International (M) Sdn Bhd [2021] 6 MLRH 540, at [12] - “[12] I am of the following view regarding the Object (CIPAA):

Part 1 of the Interpretation Acts 1948 and 1967 (IA) applies to CIPAA by virtue of s 2(1)(a) IA (CIPAA is enacted after 18.5.1967). According to s 17A IA (in Part 1 of IA), an Act of Parliament should be construed in a manner which would promote the object of the Act (Purposive Interpretation) - please see the Federal Court’s judgment in Palm Oil Research and Development Board Malaysia & Anor v S/N b9TtfyYNwkmqYiiRP2kjiQ Premium Vegetable Oils Sdn Bhd [2004] 2 CLJ 265. Accordingly, a Purposive Interpretation should be applied for all the provisions in CIPAA so as to attain the Object (CIPAA);

according to s 13(c) CIPAA, an adjudication decision regarding a claim for payment for construction work is subject to a final decision of the court or arbitral tribunal (if parties have agreed to an “arbitration agreement”) regarding the same claim (Litigation/Arbitration) - please refer to MRCB Builders v Wazam Ventures [2020] 5 MLRH 138, at [13(1)(d)]. Hence, any injustice, error and/or omission in an adjudication decision is not fatal and may be remedied subsequently in a Litigation/Arbitration;

to achieve the Object (CIPAA), adjudication proceedings should be -

simple;

speedy (as stated in the Long Title); and

economical for claimants and respondents. The following reasons do not support a legalistic, cumbersome, technical and/or costly approach to be adopted in adjudication proceedings -

adjudicators are required to deliver adjudication decisions within the time periods stipulated in s 12(2)(a) or (b) CIPAA [unless the parties agree to an extension of time for the adjudicator to deliver the adjudication decision under s 12(2)(c) CIPAA]. Any S/N b9TtfyYNwkmqYiiRP2kjiQ non-compliance with s 12(2)(a) to (c) CIPAA will render the adjudication decision void - please see s 12(3) CIPAA. If adjudication proceedings are legalistic, cumbersome and technical, adjudicators may have an onerous task to deliver their adjudication decisions within the strict time-lines prescribed by s 12(2)(a) to

CIPAA;

(ii) by reason of s 12(9) CIPAA, the Evidence Act 1950 (EA) does not apply to adjudication proceedings. It is therefore clear that Parliament has intended for adjudication proceedings to be speedy and unencumbered by questions regarding admissibility and “relevancy” of evidence [as understood in s 5 read with Chapter 2 (ss 6 to 55) EA] which has been presented to adjudicators; and

(iii) CIPAA does not require an adjudicator to be legally qualified. Nor does CIPAA require an adjudicator to have experience in legal practice regarding construction matters. As such, adjudicators who do not have legal qualification and legal experience in construction disputes, may face difficulties in conducting adjudication proceedings which are legalistic in nature; and

if adjudication proceedings are legalistic, cumbersome, technical and/or costly, this may impede, if not frustrate, the claimants’ statutory right to adjudicate their claims under CIPAA and this in turn may defeat the Object (CIPAA).” (emphasis added). S/N b9TtfyYNwkmqYiiRP2kjiQ If I have accepted the submission of MCB’s learned counsel that MCB is entitled to resist the Adjudication Proceedings (OS No. 20) by way of MCB’s Claim (Architectural Works), MCB’s Claim (Infrastructural and Walkway Works) and MCB’s Claim (LD), this will be contrary to the Object (CIPAA) because adjudication proceedings will then be lengthy, legalistic, cumbersome and costly. H(5). Whether MCB’s counterclaim sum could exceed amount claimed by KWSL in Adjudication Proceedings (OS No. 20)

In the Adjudication Proceedings (OS No. 20), MCB’s learned counsel had prayed for the Adjudicator (OS No. 20) to allow MCB’s Counterclaim for a total sum of RM5,541,396.70 which far exceeded the amount claimed in the Adjudication Proceedings (OS No. 20).

As explained in the above paragraph 27, MCB’s Counterclaim could not have been lawfully made under ss 6(2), 10(1) and 27(1) CIPAA because MCB’s Counterclaim was based on contracts other than the LA (Manpower Supply). Even if it is assumed that a respondent can set off and/or counterclaim against a claimant in an adjudication proceedings based on the same construction contract (which is the basis for the claim in the adjudication proceedings), I am of the view that the respondent, at the most, can only zeroise the claim but cannot counterclaim from the claimant for an amount which exceeds the sum claimed in the adjudication proceedings. My reasons are as follows:

the wording in s 6(2) CIPAA only allows a respondent to, at the most, dispute “wholly” the claim in an adjudication proceedings; S/N b9TtfyYNwkmqYiiRP2kjiQ

by virtue of s 27(1) CIPAA, an adjudicator’s jurisdiction is “limited” to matters referred to adjudication by the parties in, among others, the PR. If a respondent, at the most, can only zeroise a claim in an adjudication proceedings under s 6(2) CIPAA, according to s 27(1) CIPAA, the adjudicator cannot then have jurisdiction to adjudicate a counterclaim by the respondent which exceeds the amount in the PC;

s 10(1) CIPAA only allows a respondent to serve an AR which “shall answer” an AC. There is nothing in s 10(1) CIPAA which permits a respondent to counterclaim from the claimant for a sum which exceeds the sum claimed in the adjudication proceedings; and

the Object (CIPAA) is to assist the cashflow of parties who have performed construction work. It is not the purpose of CIPAA to enable parties to claim for damages for breach of construction contracts and/or torts regarding construction work The Object (CIPAA) is not attained if a respondent is permitted to counterclaim from the claimant for a sum which exceeds the amount claimed in the adjudication proceedings. This is because if an adjudicator is allowed to adjudicate a respondent’s counterclaim sum which is in excess of the amount claimed in the adjudication proceedings, this will result in a protracted and costly adjudication proceedings. H(6). Had KWSL committed tort of abuse of court process by filing Adjudication Proceedings (OS No. 20)?

MCB’s learned counsel has submitted that a tort of abuse of court process has been committed by KWSL in commencing Adjudication S/N b9TtfyYNwkmqYiiRP2kjiQ Proceedings (OS No. 20) against MCB. Reliance has been placed on the judgment of the Court of Appeal which has been delivered by Gopal Sri Ram JCA (as he then was) in Malaysia Building Society Bhd v Tan Sri General Ungku Nazaruddin Ungku Mohamed [1998] 2 CLJ 340, at 352-356 (MBSB’s Case).

I am not able to accept the above contention because MBSB’s Case concerns court proceedings which constitutes a tort of abuse of court process. Firstly, adjudication proceedings are statutory proceedings under CIPAA (not court proceedings) and cannot be the subject matter of a tort of abuse of court process. More importantly, the commencement of adjudication proceedings by a claimant is an exercise of the Statutory Right (CIPAA) by the claimant. The exercise of a Statutory Right (CIPAA) by KWSL in this case cannot amount to a abuse, let alone a tort of abuse of court process.

In Ou Yang Chow Min (practising as Ou Yang Architect) v Green Venture Capital Sdn Bhd and another case [2022] MLJU 480, at [35], I have expressed the following view regarding the court’s recognition of a new tort of abuse of adjudication proceedings: “[35] I would take this opportunity to express my view as to whether Malaysian case law should recognize a tort of abuse of adjudication process under CIPAA. Firstly, as decided by Lord MacMillan in the House of Lords in Donoghue v Stevenson [1932] AC 562, at 619, the categories of tort are never closed. Secondly, without the benefit of argument from learned counsel, I cannot envisage a tort of abuse of adjudication process unless all the following three circumstances are present: S/N b9TtfyYNwkmqYiiRP2kjiQ

a claimant (Y) has instituted adjudication proceedings against a respondent

(Z) and the adjudicator has dismissed Y’s adjudication claim against Z [Dismissal (Adjudication Claim)]. Alternatively, if an adjudication decision has been delivered in favour of Y against Z, Z has successfully applied to the High Court to set aside the adjudication decision and the High Court’s setting aside order has been affirmed on appeal by the Court of Appeal or Federal Court, as the case may be (Setting Aside Order). When there is a Setting Aside Order, Y cannot obtain leave of court under s 28 CIPAA to enforce the adjudication decision;

no Litigation/Arbitration has been commenced between Y and Z. Alternatively, Litigation/Arbitration has been instituted and resolved in favour of Z against Y [Z’s Success (Litigation/Arbitration)]. If Y is successful in Litigation/Arbitration against Z, this means that Y has performed construction work for which Z should be liable to Y. In such a case, I cannot foresee how Y has abused the adjudication process under CIPAA; and

Z has suffered loss due to the Dismissal (Adjudication Claim) or the Setting Aside Order [Z’s Loss (Adjudication)]. Z’s Loss (Adjudication) should be distinguished from Z’s loss due Litigation/Arbitration in Z’s Success (Litigation/Arbitration) [Z’s Loss (Litigation/Arbitration)]. This is because Z’s Loss (Litigation/Arbitration) may be claimed by Z from Y pursuant to tort of Y’s abuse of court process, tort of arbitral process (if recognized by Malaysian case law) and/or tort of malicious prosecution.” (emphasis added). S/N b9TtfyYNwkmqYiiRP2kjiQ Based on Ou Yang Chow Min, it is pre-mature for MCB to allege that KWSL had abused adjudication procedure under CIPAA regarding the Adjudication Proceedings (OS No. 20). H(7). Did Adjudicator (OS No. 20) breach 2nd Rule?

I reproduce below ss 13(c) and 24(c) CIPAA: “Effect of adjudication decision s 13 The adjudication decision is binding unless - …

the dispute is finally decided by arbitration or the court. Duties and obligations of the adjudicator s 24. The adjudicator shall at the time of the acceptance of appointment as an adjudicator make a declaration in writing that - …

he shall comply with the principles of natural justice; …” (emphasis added).

MCB’s learned counsel has invited this court to set aside the Adjudication Decision (OS No. 20) on the ground that the 2nd Rule had been breached when the Adjudicator (OS No. 20) did not give “proper weight” to MCB’s submission in the Adjudication Proceedings (OS No. 20). I am not able to accede to this contention due to the following reasons:

the Adjudicator (OS No. 20) had given MCB its right to adduce evidence and the right to submit on all issues which arose in S/N b9TtfyYNwkmqYiiRP2kjiQ Adjudication Proceedings (OS No. 20) - please refer to the judgment of David Wong Dak Wah JCA (as he then was) in the Court of Appeal in ACFM Engineering & Construction Sdn Bhd v Esstar Vision Sdn Bhd & another appeal [2016] MLJU 1776, at [20]; and

the Adjudicator (OS No. 20) had considered but rejected all the contentions advanced by MCB in Adjudication Proceedings (OS No. 20). An adjudicator’s rejection of a party’s submission in an adjudication proceedings does not amount to a breach of the 2nd Rule. H(8).

Nature of court’s power under s 15 CIPAA The scope of the court’s power to set aside an adjudication decision under s 15(a) to (d) CIPAA has been explained in Alpha Galaxy Sdn Bhd v Euro Destar (M) Sdn Bhd [2021] AMEJ 614, at [26], as follows: “[26] This case serves as a reminder of the nature of the court’s power in deciding an application under s 15 CIPAA (Setting Aside Application). I am of the following view regarding a Setting Aside Application:

an adjudication decision is provisional under s 13(a) to (c) CIPAA. The High Court may set aside an adjudication decision -

if the adjudicator has no jurisdiction to adjudicate the matter - please refer to Uzma Engineering Sdn Bhd v Khan Co Ltd [2020] MLJU 1272, at [22]; and/or

there is proof of any one or more of the circumstances stipulated in s 15(a) to (d) read with s 13(a) CIPAA; and S/N b9TtfyYNwkmqYiiRP2kjiQ

a Setting Aside Application is not an appeal to the High Court against an adjudication decision. Nor is a Setting Aside Application a Judicial Review of an adjudication decision. Accordingly, the court in a Setting Aside Application cannot review the merits of an adjudication decision and cannot set aside an adjudication decision merely on any one or more of the following grounds -

an error of law has been committed by an adjudicator (unless the adjudicator has answered a “wrong” question of law which does not arise from the dispute to be adjudicated upon) - please see the judgment of Lee Swee Seng J (as he then was) in the High Court case of Econpile (M) Sdn Bhd v IRDK Ventures Sdn Bhd & another case [2016] 5 CLJ 882, at [71];

an adjudicator has interpreted erroneously a provision in the construction contract - Econpile, at [67];

an adjudicator has misconstrued relevant documents;

relevant evidence has been wrongly excluded by an adjudicator;

an adjudicator has erroneously admitted irrelevant evidence;

an adjudicator has failed to attach due weight to relevant evidence, oral or documentary;

undue weight has been given by an adjudicator to any piece of evidence;

an adjudicator has assessed erroneously the evidence presented to the adjudicator; S/N b9TtfyYNwkmqYiiRP2kjiQ

a plain error regarding a finding of fact has been made by an adjudicator;

an adjudicator has omitted to make a finding of fact which can be adequately supported by evidence;

an erroneous finding of mixed fact and law has been arrived at by an adjudicator - please refer to Lee Swee Seng J’s decision in the High Court in Syarikat Bina Darul Aman Bhd & Anor v Government of Malaysia [2017] 4 AMR 477, at [60];

an adjudicator has made a wrong inference from the evidence;

an adjudicator has erroneously omitted to make the right inference from the evidence;

errors have been made in the reasons given by an adjudicator in support of the adjudication decision; and

an adjudicator has erred in his or her reasoning with regard to the adjudication decision. The above errors and omission by an adjudicator can be remedied by an arbitration or litigation (whichever the case may be) regarding the dispute in question [as provided in s 13(c) CIPAA] - Econpile, at [67].” (emphasis added).

Premised on Alpha Galaxy, even if it is assumed that the Adjudicator (OS No. 20) had erroneously rejected any one or all the contentions made by MCB in Adjudication Proceedings (OS No. 20) [Adjudicator’s S/N b9TtfyYNwkmqYiiRP2kjiQ Error(s)], the court has no power to set aside the Adjudication Decision (OS No. 20) unless MCB has satisfied the court of the existence of any one of the grounds stipulated in s 15(a) to (d) CIPAA. Furthermore, the Adjudicator’s Error(s) can and should only be remedied in MCB’s Suit.

Outcome of Setting Aside Application (OS No. 20) As explained in the above Parts H(1) to H(8), I have no hesitation to dismiss the Setting Aside Application (OS No. 20).

Court’s discretion to stay enforcement of adjudication decisions Section 16 CIPAA provides as follows: “Stay of adjudication decision s 16(1) 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.

The High Court may grant a stay of the adjudication decision or order the adjudicated amount or part of it to be deposited with the Director of the KLRCA or make any other order as it thinks fit.” (emphasis added).

In the Federal Court case of View Esteem Sdn Bhd v Bina Puri Holdings Bhd [2019] 5 CLJ 479, at [65], [66] and [74], Zulkefli S/N b9TtfyYNwkmqYiiRP2kjiQ Makinudin PCA has decided that the court may exercise its discretion under s 16(1)(b) CIPAA to stay the enforcement of an adjudication decision pending the disposal of Litigation/Arbitration in either one of the two following circumstances [2 Alternative Grounds (View Esteem)] -

there is a clear and unequivocal error in the adjudication decision [1st Ground (View Esteem)]; or

it is in the interest of justice for the court to stay the enforcement of the adjudication decision [2nd Ground (View Esteem)].

In support of the Stay Application (OS No. 20), MCB’s learned counsel has cited cases regarding the Special Circumstances Test which has been applied in the exercise of the court’s discretionary power to stay the execution of a Judgment/Order pending the disposal of an appeal against the Judgment/Order. With respect, I am not able to apply the Special Circumstances Test in deciding an application pursuant to s 16(1)(b) CIPAA to stay the enforcement of an adjudication decision pending the outcome of Litigation/Arbitration. This is because our apex court has decided that the 2 Alternative Grounds (View Esteem) shall be applied by the court in deciding whether to grant a stay of the enforcement of an adjudication decision under s 16(1)(b) CIPAA - please refer to the above paragraph 39. From the view point of the stare decisis doctrine, I am bound by our Federal Court’s judgment in View Esteem. It is clear that the 2 Alternative Grounds (View Esteem) are different from the Special Circumstances Test. In fact, the 2 Alternative Grounds (View Esteem) have stipulated a lower threshold vis-a-vis the Special Circumstances Test - please refer to Encorp Iskandar Development S/N b9TtfyYNwkmqYiiRP2kjiQ Sdn Bhd v Konsortium Ipmines Merz Sdn Bhd. and another case [2021] 7 AMR 749, at [8(2)]. I(1). Can MCB rely on 1st Ground (View Esteem)?

I am firmly of the view that the Adjudicator (OS No. 20) did not make any error in the Adjudication Decision (OS No. 20), let alone a clear and unequivocal one - please refer to the above Parts H(1) to H(8). Hence, there is no room for the invocation of the 1st Ground (View Esteem) in respect of the Adjudication Decision (OS No. 20). I(2). Should court apply 2nd Ground (View Esteem)?

According to MCB’s learned counsel, the Special Circumstances Test is satisfied in this case because of the following reasons, among others -

MCB is a public listed company while KWSL is a private limited company. KWSL’s “financial standing” is not strong as compared to that of MCB;

if the Stay Application (OS No. 20) is not allowed, KWSL can commence execution proceedings or winding up proceedings against MCB (Execution/Winding Up Proceedings) based on the Adjudication Decision (OS No. 20). Irreparable “harm” will be caused to MCB’s business and reputation upon the institution of Execution/Winding Up Proceedings. Such a harm cannot be compensated in monetary terms; and

if the Adjudicated Amount (OS No. 20) is paid by MCB to KWSL and if MCB’s Suit is resolved in favour of MCB against KWSL, there is a S/N b9TtfyYNwkmqYiiRP2kjiQ “high risk” that KWSL is unable to repay the Adjudicated Amount (OS No. 20) to MCB.

Firstly, as explained in the above paragraph 40, I cannot apply the Special Circumstances Test in my determination of the Stay Application (OS No. 20).

Secondly, I am not able to accept the above contentions by MCB’s learned counsel. This is because it is only just for the court to refuse the Stay Application (OS No. 20) based on the following evidence and reasons:

KWSL has been deprived of cash flow since MCB’s refusal to pay the Adjudicated Amount (OS No. 20) to KWSL; and

if -

there is no stay of enforcement of the Adjudication Decision (OS No. 20);

the Adjudicated Amount (OS No. 20) is paid by MCB to KWSL; and

MCB’s Suit is decided in favour of MCB against KWSL - there is no real risk or likelihood that KWSL is unable to repay the Adjudicated Amount (OS No. 20) to MCB. This decision is supported by the following reasons - S/N b9TtfyYNwkmqYiiRP2kjiQ

MCB has not adduced any evidence in the Stay Application (OS No. 20) to show that KWSL is commercially insolvent in the sense that KWSL is unable to pay its debts when these debts fall due for payment. In fact, KWSL is still an on-going business concern;

(ii) no monetary judgment has been obtained by any party against KWSL;

(iii) no statutory demand under s 466(1)(a) of the Companies Act 2016 (CA) has been served on KWSL;

(iv) no winding up petition pursuant to s 464(1) CA has been presented against KWSL; and

no suit has been filed against KWSL by KWSL’s bankers, financiers, creditors, sub-contractors, suppliers, clients and/or employees for any debt due from KWSL to them. I(3).

Court’s decision in Stay Application (OS No. 20) MCB bears the evidential onus to satisfy the court under s 16(1)(b) CIPAA that the Stay Application (OS No. 20) should be allowed - please refer to Kurniaan Maju Sdn Bhd v HAS Setiamurni Sdn Bhd [2020] 9 MLJ 103, at [14]. I am of the view that premised on all the evidence adduced by MCB in the Stay Application (OS No. 20), MCB has failed to discharge this burden. Based on this reason as well as the reasons S/N b9TtfyYNwkmqYiiRP2kjiQ stated in the above Parts I(1) and I(2), I have no hesitation to dismiss the Stay Application (OS No. 20).

Enforcement OS No. 23 I reproduce below s 28 CIPAA: “s 28. Enforcement of adjudication decision as judgment

A party may enforce an adjudication decision by applying to the High Court for an order to enforce the adjudication decision as if it is a judgment or order of the High Court.

The High Court may make an order in respect of the adjudication decision either wholly or partly and may make an order in respect of interest on the adjudicated amount payable.” (emphasis added).

In Inai Kiara Sdn Bhd v Puteri Nusantara Sdn Bhd [2019] 2 CLJ 229, at [24] to [26], Mary Lim Thiam Suan JCA (as she then was) has delivered a judgment of the Court of Appeal that the court may exercise its discretion to grant leave under s 28(1) and (2) CIPAA to enforce an adjudication decision if all the following three conditions are fulfilled:

the adjudication decision has been made in favour of the party applying for leave under s 28 CIPAA;

the party against whom an adjudication decision is made, has failed to pay the adjudicated amount on the date specified in the adjudication decision; and S/N b9TtfyYNwkmqYiiRP2kjiQ

there is no prohibition on the court’s discretionary power to grant leave to enforce the adjudication decision [3 Conditions (Enforcement)].

With regard to the Enforcement OS No. 23, I am satisfied that the 3 Conditions (Enforcement) have been fulfilled in this case. Accordingly, the Enforcement OS is allowed. K. Setting Aside Application (OS No. 9) K(1). Whether MCB is barred by issue estoppel principle from raising issues which have been decided in Setting Aside Application (OS

No. 20) In support of the Setting Aside Application (OS No. 9), MCB’s learned counsel had raised the following contentions which had been previously advanced to support the Setting Aside Application (OS No. 20):

the Adjudication Proceedings (OS No. 9) should have been dismissed solely because of the earlier commencement of MCB’s Suit;

the court should set aside the Adjudication Decision (OS No. 9) because the Adjudication Proceedings (OS No. 9) had been commenced after the filing of MCB’s Suit;

the Adjudicator 9) should have dismissed the Adjudication Proceedings (OS No. 9) due to KWSL’s mala fides; S/N b9TtfyYNwkmqYiiRP2kjiQ

the Adjudication Decision (OS No. 9) should be set aside by the court on the ground that the Adjudication Proceedings (OS No. 9) had been commenced in bad faith by KWSL;

the Adjudication Proceedings (OS No. 9) should have been dismissed by the Adjudicator (OS No. 9) because the Adjudication Proceedings (OS No. 9) were inconsistent with the Object (CIPAA);

the court should set aside the Adjudication Decision (OS No. 9) as the Adjudication Proceedings (OS No. 9) were contrary to the Object (CIPAA);

MCB could oppose the Adjudication Proceedings (OS No. 9) by relying on construction contracts other than the LA (Walkway Works) [the basis for the Adjudication Proceedings (OS No. 9)];

MCB could counterclaim from KWSL in the Adjudication Proceedings (OS No. 9) for a sum which had exceeded the amount claimed by KWSL in the Adjudication Proceedings (OS No. 9);

KWSL had committed a tort of abuse of court process by filing the Adjudication Proceedings (OS No. 9) against MCB; and

the Adjudicator (OS No. 9) had breached the 2nd Rule by not giving proper weight to the above submission by MCB [MCB’s Contentions (OS No. 9)]. S/N b9TtfyYNwkmqYiiRP2kjiQ

I have rejected MCB’s Contentions (OS No. 9) in dismissing the Setting Aside Application (OS No. 20) [Court’s Decision (OS No. 20)] - please refer to the above Parts H(1) to H(7).

In the Supreme Court case of Asia Commercial Finance (M) Bhd lwn Kawal Teliti Sdn Bhd [1995] 3 MLJ 189, at 197-198, 198-199 and 199- 200, Peh Swee Chin FCJ has decided as follows: “What is res judicata? It simply means a matter adjudged, and its significance lies in its effect of creating an estoppel per rem judicatum. When a matter between two parties has been adjudicated by a court of competent jurisdiction, the parties and their privies are not permitted to litigate once more the res judicata, because the judgment becomes the truth between such parties, or in other words, the parties should accept it as the truth; res judicata pro veritate accipitur. The public policy of the law is that, it is in the public interest that there should be finality in litigation - interest rei publicae ut sit finis litium. It is only just that no one ought to be vexed twice for the same cause of action - nemo debet bis vexari proeadem causa. Both maxims are the rationales for the doctrine of res judicata, but the earlier maxim has the further elevated status of a question of public policy. … Thus, there are in fact two kinds of estoppel per rem judicatum. The first type relates to cause of action estoppel and the second, to issue estoppel, which is a development from the first type. The cause of action estoppel arises when rights or liabilities involving a particular right to take a particular action in court for a particular remedy are determined in a final judgment and such right of action, ie the cause of action, merges into the said final judgment; in layman's language, the cause of action has turned into the said S/N b9TtfyYNwkmqYiiRP2kjiQ final judgment. The said cause of action may not be relitigated between the same parties because it is res judicata. In order to prevent multiplicity of action and also in order to protect the underlying rationales of estoppel per rem judicatum and not to act against them, such estoppel of cause of action has been extended to all other causes of action (based on the same facts or issues) which should have been litigated or asserted in the original earlier action resulting in the final judgment, and which were not, either deliberately or due to inadvertence. … … On the other hand, the issue estoppel literally means simply an issue which a party is estopped from raising in a subsequent proceeding. However, the issue estoppel, in a nutshell, from a consideration of case law, means in law a lot more, ie that neither of the same parties or their privies in a subsequent proceeding is entitled to challenge the correctness of the decision of a previous final judgment in which they, or their privies, were parties. This sounds like explaining a truism, but it is the corollary from that statement that is all important and that could have given birth to the controversies alluded to above; the corollary being that neither of such parties will be allowed to adduce evidence or advance any argument to contradict such decision. …” (emphasis added).

Premised on Asia Commercial Finance, by virtue of the application of the issue estoppel principle, MCB is barred by the Court’s Decision (OS No. 20) from raising MCB’s Submission (OS No. 9) to support the Setting Aside Application (OS No. 9). K(2). Did Adjudicator (OS No. 9) breach 2nd Rule? S/N b9TtfyYNwkmqYiiRP2kjiQ

With respect to MCB’s learned counsel, I am of the view that the Adjudicator (OS No. 9) had not breached the 2nd Rule in making the Adjudication Decision (OS No. 9) because -

MCB had been granted its right by the Adjudicator (OS No. 9) to adduce evidence and to submit on all questions which arose in the Adjudication Proceedings (OS No. 9); and

all the submissions made by MCB’s learned counsel in the Adjudicator (OS No. 9) had been rejected the Adjudicator (OS No. 9). K(3).

Court’s determination of Setting Aside Application (OS No. 9) As explained in the above Parts H(1) to H(8), K(1) and K(2), I am constrained to dismiss the Setting Aside Application (OS No. 9). L. Should court allow Stay Application (OS No. 9)?

I have no hesitation to dismiss the Stay Aside Application (OS No. 9) on the following grounds:

the Adjudicator (OS No. 9) had not made any clear and unequivocal error so as to enable MCB to rely on the 1st Ground (View Esteem);

premised on the reasons stated in the above paragraph 44, it is not just for this court to exercise its discretion to stay the enforcement of the Adjudication Decision (OS No. 9) pending the outcome of MCB’s Suit; and S/N b9TtfyYNwkmqYiiRP2kjiQ

notwithstanding all the evidence adduced by MCB in the Stay Application (OS No. 9), MCB has failed to discharge the evidential onus to persuade this court to allow the Stay Application (OS No. 9). M.

Enforcement OS (No. 13) It is clear that the 3 Conditions (Enforcement) have been satisfied with regard to the Enforcement OS (No. 13). Consequently, this court grants an order in terms of the Enforcement OS (No. 13).

Conclusion This judgment sets forth the reasons and evidence for reaching the Court’s Decision (OS Nos. 20 and 23) and Court’s Decision (OS Nos. and 13). S/N b9TtfyYNwkmqYiiRP2kjiQ WONG KIAN KHEONG Judge High Court of Malaya Shah Alam, Selangor Darul Ehsan DATE: 5 AUGUST 2022 Counsel for MCB: Ms. Barvina A/P Punnusamy & Mr. Harikannan A/L Ragavan (Messrs Jayadeep Hari & Jamil) Counsel for KWSL: Mr. Michael Yap Chih Hong & Encik Haikaldin Bin Mahyidin (Messrs Tommy Thomas) S/N b9TtfyYNwkmqYiiRP2kjiQ