Lde Project Sdn Bhd v Kay Pride Sdn Bhd (BA-24C-1-01/2024)

(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. S/N gGlyGtUn7EuSp4DiquzliQ

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 i. to Tiara Contours pursuant to Section 30(2) CIPAA 2012 fatal. [13] Undeniably, upon receipt of the Plaintiff written request as required pursuant to Section 30(1) CIPAA 2012, the Defendant had not issued a notice in writing to Tiara Contours to show proof that it has paid the adjudicated amount to the Plaintiff pursuant to Section 30(2) CIPAA

The Defendant has failed to comply with this mandatory requirement and as such whether such a failure is fatal for the Defendant to then claim that there are no monies due or payable to Tiara Contours. S/N gGlyGtUn7EuSp4DiquzliQ [14] In the case of PCOM Pacific Sdn Bhd v Apex. Communication Sdn Bhd [2020] 1 LNS 130, it was held that failure to comply the requirement in accordance to Section 30(2) CIPAA 2012 is fatal to the defence that there are no monies due and owing from the first defendant to the second defendant. This was subsequently affirmed by the Court of Appeal in HSL Ground Engineering Sdn Bhd v. Civil Tech Resources Sdn Bhd & Another Case [2020] CLJU 526; [2020] 1 LNS 526; [2021] 8 MLJ 347 and Bond M&E Sdn Bhd v Pali PTP Sdn Bhd [2022] 11 MLJ 58. [15] Therefore, in the absence of notice in writing to Tiara Contours, the Defendant is to pay the Adjudication amount to the Plaintiff pursuant to Section 30(3) CIPAA 2012. However, the invocation of this section is only if there is money due or payable at the time the receipt of the request under Section 30(1) was made i.e. pursuant to Section 30(5) CIPAA 2012. ii. Whether the Plaintiff has discharged its legal burden via this action. [16] The defence raised by the Defendant in an attempt to resist Section 30 application is that there is no money due or payable to Tiara Contours S/N gGlyGtUn7EuSp4DiquzliQ [17] In the case of Chong Lek Engineering Works Sdn Bhd v PFCE Integrated Plant And Project Sdn Bhd [2020] 1 LNS 2251, Wong Kian Kheong J (as he then was) held that it was inadequate for the Employer to simply make a bare assertion, as the burden is on the Employer to prove that there is no money due to be paid to the main contractor. Failure to substantiate its assertion with documentary evidence would lead the court to invoke an adverse inference against the Employer. [18] His Lordship had further stated that whilst the Plaintiff bears the legal burden to prove the followings: i. that the adjudication amount was not paid by the main contractor; ii. that a written request has been made to the Defendant for direct payment; and iii. Notice for Direct Payment. (which it has in this case), the Defendant has the evidential burden to prove that there is no money due or payable to Tiara Contours in this case. S/N gGlyGtUn7EuSp4DiquzliQ [19] On the issue of or , the court in, among others, Chong Lek Engineering Works Sdn Bhd v PFCE Integrated Plant And Project Sdn Bhd (supra) , HSL Ground Engineering Sdn Bhd v. Civil Tech Resources Sdn Bhd and another (supra) , MKP Builders Sdn Bhd v. Turnpike Synergy Sdn Bhd [2021] 1 LNS 1238, WTK Engineering Sdn Bhd v. Seriemas Development Sdn Bhd [2021] 1 LNS 424; [2021] MLJU 520 and Zeta Letrik Sdn Bhd v. Jaks Island Circle Sdn Bhd [2022] 1 LNS 427 have considered the words "due or payable" in Section 30(5) CIPAA 2012 and interpreted the same literally, according to their ordinary plain meaning. [20] With specific reference to the case of HSL Ground Engineering Sdn Bhd v. Civil Tech Resources Sdn Bhd and another summons [2020] 1 LNS 526, where the meaning of "due or payable" in the context of Section 30(5) CIPAA 2012 was considered and Lim Chong Fong J (as he then was) held, inter alia, that: "[29] It is plainly provided in Section 30(5) of the CIPAA that the defendant is only obliged to make direct payment if there is money due or payable to CTSB. It is not due and payable. In the English Court of Appeal case of Videocon Global Ltd & Anr v. Goldman Sachs International [2016] EWCA Civ 130, it was held that there is a distinction between due S/N gGlyGtUn7EuSp4DiquzliQ and payable in that a debt accrues when it is due whilst an obligation to pay arises when it is payable. They are thus not synonymous and it seems that the former is stricter when compared to the latter. In the English building contract case of Dunlop & Ranken Ltd v. Hendell Steel Structures Ltd, Pitchers Ltd (Garnishees) [1957] 1 WLR 1102 on garnishment, it was held that money under a building contract based on the RIBA form is not due for attachment until a certificate by the architect has been issued for that sum of money. It is plain that for purposes of garnishment under the then Rules of the Supreme Court of England, only debt due or accruing debt could be garnished. Thus, in my view, if it is just payable instead of due and payable, it suffices so long there is an obligation or liability to pay upon it being properly claimed. (Emphasis added) [21] In this case, in applying the settled principle in what constitutes or , by Practical Completion (CPC) has been issued on 30.11.2017. [22] The Defendant also confirms that the CMGD is yet to be issued and as such the 2nd moiety is still being retained by the Defendant which clearly shows that there is money upon the achievement of the same. S/N gGlyGtUn7EuSp4DiquzliQ iii. Whether the Defendant has discharged its evidential burden to prove that there are no monies due and payable to Tiara Contours. [23] Although it has been established that there is a part of the retention sum which has not been released to Tiara Contours, however, based on the summary of accounts given by the Defendant on the payments in relation to the contract between the Defendant and Tiara Contours, according to the Defendant there is a sum of RM12,974,878.85 which is said to be owing to the Defendant by Tiara Contours. [24] However, this amount is said to be calculated based on mostly LAD imposed on Tiara Contours amounts which are said to be deductible from the balance contract sum and the retention sum is yet to be agreed by Tiara Contours. [25] Even the final account is yet to be finalised by the Defendant and Tiara Contours. Therefore, these sums that have been given by the Defendant in order to prove to this court that there are no monies due or payable to Tiara Contours being the main contractor are not finalised as to-date. S/N gGlyGtUn7EuSp4DiquzliQ [26] In fact, in the Statement of Final Account produced to this court (pg 238/pdf 71- encl 8) the contract sum has been reduced by more than RM40,000,000.00 i.e from the original contract sum of RM257,648,929.52 to a lesser sum of RM217,364,593.38. However, there is no evidence to show that this is an agreed reduced figure by Tiara Contours. [27] Furthermore, as contended by the Plaintiff, the Defendant has not adduced any evidence to prove to this court that the alleged sum of RM197,976,381.24 has in fact been paid to Tiara Contours. [28] As such, it is the considered view of this court that the Defendant has failed to discharge its evidential burden to prove on a balance of probabilities that the 2nd moiety sum is no longer available as due or payable to Tiara Contours at the time the written request was made by the Plaintiff. [29] Based on the foregoing, the Plaintiff has successfully fulfilled the four (4) conditions in respect of an application as enunciated in the case S/N gGlyGtUn7EuSp4DiquzliQ of Cabnet System (M) Sdn Bhd v Dekad Kaliber Sdn Bhd & Anor [2020] MLJU 311 : i. The main contractor has failed to pay the adjudication amount to the Plaintiff; ii. The Plaintiff has made a written request to the Defendant to pay the adjudicated amount directly to the Plaintiff; iii. There is money due or payable from the Defendant to the main contractor at the time of receiving the written request; and iv. Request and did not pay the adjudication amount to the Plaintiff iv. Whether Adjudication Amount includes interest and cost. [30] The final issue to be determined is whether the adjudication amount includes interest and cost. The Court of Appeal in the case of 4Pali PTP Sdn Bhd v. Bond M&E Sdn Bhd & Another [2023] 9 CLJ 740 [2023] 1 LNS 1787 had decided as follows on this issue: In the absence of definition of the phrase 'adjudicated amount' in CIPAA, we therefore find on our purposive construction or interpretation that it includes interest and costs in furtherance of the purpose and object of the S/N gGlyGtUn7EuSp4DiquzliQ S/N gGlyGtUn7EuSp4DiquzliQ