Macly Equity Sdn. Bhd. v Prestij Mega Construction Sdn Bhd (WA-24C-47-03/2023)

The Plaintiff had by way of enclosure 5 (Enclosure 5) and pursuant to section 16 of the Construction Industry Payment and Adjudication Act 2012 (“CIPAA”) and/or Order 69A rule 4 of the Rules of court 2012 applied to stay the Adjudication Decision dated 9.2.2023 (“AD”) granted in favour of the Defendant pending the final disposal of the arbitration proceedings between the Plaintiff and the Defendant commenced by way of Notice of Arbitration dated 28.4.2023.

The grounds in support of Enclosure 5 were inter alia as follows:- S/N vEq1MIslTkoae/xk1Os1w

2.1

2.2 The Defendant failed, neglected and/or refused to complete the work within the Extended Date of Completion. Therefore, a Liquidated and Ascertained Damages (“LAD”) of RM7,410,000.00 was imposed against the Defendant on 27.4.2017 due to its delay in completion of works;

2.3 The Defendant commenced the adjudication proceeding against the Plaintiff;

2.4 The proceeding culminated in the Adjudication Decision which is now the subject matter of the Defendant’s Kuala Lumpur High Court Originating Summons No. WA-24C-30-02/2023 to enforce the Adjudication Decision (“OS 30”) and the Plaintiff’s Kuala Lumpur High Court Originating Summons No. WA-24C- 47-03/2023 to set aside the Adjudication Decision (“OS 47”); S/N vEq1MIslTkoae/xk1Os1w

2.5 On 28.4.2023, the Plaintiff issued a Notice of Arbitration against the Defendant to commence arbitration in seeking declarations and orders in relation to the Plaintiff’s LAD claim and claim for rectification costs by third parties against the

2.6 The Adjudication Decision was sought to be stayed on the following grounds: a. There are clear errors in the Adjudication Decision, especially the ways the Adjudicator dealt with the Plaintiff’s jurisdictional objection, acted in excess of his jurisdiction and the breach of natural justice; b. The Defendant is currently dormant and impecunious based on the following circumstances: i. The Defendant’s business premises are shut and appears not to be in operation; ii. The Defendant’s financial statement reflected losses as at the financial year ending 31.1.2018. There are no records of filing of the subsequent financial statements with the Companies Commission of Malaysia for five (5) consecutive years; c. Therefore, there is risk that the Plaintiff will not be able to recover the sum paid arising from the Adjudication Decision to the Defendant if the arbitration is decided in the Plaintiff’s favour; and d. There is no urgency for the enforcement of the Adjudication Decision, as it took almost six (6) years after the issuance S/N vEq1MIslTkoae/xk1Os1w of the Certificate of Practical Completion for the Defendant to initiate the Adjudication.

After hearing the respective learned counsels submitting orally before this Court on 6.6.2023 and reading their written submissions filed earlier, this Court had dismissed with costs in the cause Enclosure 5 but ordered in accordance with prayer 3 thereto a stay pending the decision of the setting aside of the AD on condition that sums referred to in the AD be deposited in a joint stakeholders account to be held by both solicitors on or before 19.6.2023 and the said sum to be released within 7 working days of the disposal of the Setting Aside of the AD to the successful party.

Dissatisfied with the decision of the Court as per the above, the Plaintiff has since filed a Notice of Appeal on 14.6.2023 against this Court’s Decision/Order given 6.6.2023.

5.

In relation to the imposition of Liquidated and Ascertained Damages (“LAD”) in the Project, Clause 8.0 of the LOA2 provides as follows: Date of Commencement: 1st June 2014 Date of Completion: 14th January 2016 Liquidated & Ascertained Damages (L.A.D) for late completion: RM30,000.00 per Calendar Day

However, Prestij failed and neglected to complete the work on or before the date of completion i.e. 14.1.2016 as stipulated in the Contract.

As a result of Prestij’s said delay, the Architect, Gamal Arkitek Perunding (M) Sdn Bhd (“Architect”) had on 18.1.2016, issued a Certificate of Non-Completion (“CNC 1”) 3, which gave rise to the Plaintiff’s LAD claim against Prestij.

Following the issuance of CNC 1, the Architect subsequently allowed two (2) extension of time to Prestij for 3 days 4 and 11 days 5 respectively, which brought the extended date of completion to 28.1.2016 (“Extended Date of Completion”)

Notwithstanding the granting of the extension of time, Prestij had allegedly failed, neglected and/or refused to complete the work before or on the Extended Date of Completion. S/N vEq1MIslTkoae/xk1Os1w

As a completion of formalities, the Architect later issued another Certificate of Non-Completion on 18.8.2022 (which was backdated to 23.1.2016) (“CNC 2”) , pertaining to Prestij’s non-completion of work upon the expiry of the Extended Date of Completion.

Prestij completed the work on 1.10.2016, at which point almost 9 months had lapsed from the contractually stipulated date of completion. Following the said completion, the Architect thereby issued the Certificate of Practical Completion (“CPC”).

In relation to the computation of the LAD against Prestij, the Quantity Surveyor, SC QS Consult (“QS”) indicated as follows: “Period of Delay: From 28th January 2016 to 01st October 2016 No of days of Delay: 247 Calendar days 247 days @ RM 30,000.00 (LAD/day) = RM 7,410,000.00”

In the Kuala Lumpur Sessions Court Suit No. WA-B52C-9-03/2018 (“KLSC Garnishee Proceeding”) involving Macly and Prestij as the Garnishee and Judgement Debtor respectively, the Court dismissed the said proceeding with costs on 17.10.2019.

This was followed by Keller’s appeal in the Kuala Lumpur High Court Civil Appeal No. WA-12AC-20-10/2019 (“KLHC Garnishee Appeal”), which was dismissed on 12.2.2020, thereby affirming the decision in KLSC Garnishee Proceeding. There was no further challenge made against the said decision.

By way of Kuala Lumpur High Court Originating Summons No. WA24C-132-06/2020 (“OS 132”) , Macly applied for injunctive relief S/N vEq1MIslTkoae/xk1Os1w against Prestij, inter alia, to prevent Prestij from proceeding with the 1st Adjudication against Macly on the grounds that the KLSC Garnishee Proceeding (which was affirmed in KLHC Garnishee Appeal) had found that no monies was due by Macly to Prestij.

OS 132 was dismissed on 2.3.2021, which was affirmed upon appeal in the Court of Appeal on 15.10.2021.

By way of Kuala Lumpur High Court Originating Summons No. WA24NCC-111-03/2021 (“OS 111”), Prestij applied for Fortuna injunction against Macly, inter alia, to prevent Macly from presenting winding up petition against Prestij based on Macly’s imposition of LAD against Prestij.

Subsequently, OS 111 was allowed on 9.7.2021, which was affirmed upon appeal in the Court of Appeal on 28.4.2022.

In August 2022, Prestij commenced the adjudication proceeding against Macly. The proceeding culminated in the Adjudication Decision which is now the subject matter of OS 30 and OS 47.

On 28.4.2023, Macly issued a Notice of Arbitration18 against Prestij to commence arbitration, seeking declarations and orders in relation to Macly’s LAD claim and claim for rectification costs by third parties in the Project against Prestij. There was no response received from Prestij in relation to the Notice of Arbitration upon expiry of the 21 days stipulated in the said Notice. Presently, the arbitration proceeding is pending reference to the appointing authority to appoint an arbitrator. S/N vEq1MIslTkoae/xk1Os1w

The Plaintiff had in support of Enclosure 5, firstly raised certain allegedly clear errors in the AD with regards inter alia the issue of res judicata which they claimed was wrongfully decided and the failure to hold a full hearing with regards the issue of the Certificate of Non Completion and referred to the Federal Court case of View Esteem Sdn Bhd v Bina Puri Holdings Bhd [2018] 2 MLJ 22 to justify their reasons for a Stay to be granted.

With respect I am of the view that View Esteem (supra) must be read in its proper context in that the said case had also held that a Stay ought not be given readily and caution must be exercised when doing so. There the apex court had stated: “[81] From observations made on the laws from the other jurisdictions, an adjudication award can be reviewed and challenged in a variety of ways. A stay application in other jurisdictions is made only when the other avenues for review and challenge to the award are exhausted. It therefore makes sense that applications for stay in other jurisdictions are rarely granted. We are of the view that it is however not right to rely on those decisions to justify restricting the statutory power of stay in Malaysia simply on the financial status of the other party. The CIPAA contains no such restriction. S/N vEq1MIslTkoae/xk1Os1w [82] We are in agreement with the contention of the appellant that a more liberal reading of s 16 of the CIPAA would allow some degree of flexibility to the courts to stay the award where there are clear errors, or to meet the justice of the individual case. It is accepted that a stay of the award ought not be given readily and caution must be exercised when doing so….”

Section 16 of CIPAA governs the provisions of a stay of the AD and the said section reads:

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.

I however agree with counsel for the Plaintiff that there are no time lines specified in the Rules of Court 2012 for the Stay Application to be made.

In relation to the alleged clear errors in the AD as contended by the Plaintiff, I find that they are in essence inter alia findings by the Adjudicator which relate to the jurisdiction to review his or her own jurisdiction and the issue of res judicata that the dispute had been allegedly finally decided by a Court of competent jurisdiction as well as to the issuance of CNC 2 and the issue of the Plaintiff not being entitled to impose LAD for the alleged delay of works as well as any S/N vEq1MIslTkoae/xk1Os1w alleged breach of natural justice should be dealt with in the Setting Aside of the AD. This Court is of the view that at these proceedings under Enclosure 5, the Court should not pre judge the issue as the Setting Aside of the AD application has yet to be disposed of by this Court at the current moment and that such issues are to be properly dealt with at the said Setting Aside of the AD.

The Plaintiff further contends that the Defendant is currently dormant and impecunious. On this issue of the financial status of the Defendant, after looking as a whole at the financial statements as at 31.1.2018 in exhibit A-3 of enclosure 6 showing a loss of negative RM12,296 and taking into account the fact that the Plaintiff had allegedly not paid the Defendant since 2017 for the works done in relation to Progress Certificate no. 28 and the variation works as well as the withholding of the retention sum, I find that the alleged impecuniosity is prima facie attributable to the non payment and failure by the Plaintiffs to make payment the sums allegedly owed to the Defendant since the year 2017.

To allow the Plaintiff to take advantage of the aforesaid non payment to the Defendant and grant a Stay of the AD on such a ground, would in my decision be akin to allowing the Plaintiff to deprive the Defendant from its fruits of litigation and be unfair to the Defendant Lack of Urgency for the Enforcement of the Adjudication Decision S/N vEq1MIslTkoae/xk1Os1w

With regards the assertion that there is no urgency of the enforcement of the AD, I have perused the table provided by the Defendant which I reproduced in toto and which is as follows:-

06.08.2019 Keller Sdn Bhd (“Keller”), the sub-contractor appointed by Prestij for part of the works in the Contract filed a Notice of Application against Macly (as Garnishee) to execute Keller’s JID against Prestij (“Keller’s Garnishee Proceeding”) and Macly was ordered to show cause in Keller’s Garnishee Proceeding 17.10.2019 The Learned Sessions Court Judge was satisfied that Macly had shown sufficient cause and Keller’s garnishee application was dismissed.

13.05.2020 Prestij issued a Payment Claim pursuant to CIPAA 2012 to claim from Macly a sum of RM5,063,128.33 (inclusive of interest) based on the Progress Certificate No. 28 issued by Macly.

19.06.2020 Macly filed an application in Kuala Lumpur High Court seeking a declaration that Keller’s Garnishee Proceeding had finally decided the dispute between the parties and injunction against Prestij from initiating adjudication or arbitration proceedings (“OS 132”).

17.02.2021 While pending the decision of the High Court for OS 132, Macly had prematurely issued a Statutory Demand to demand from Prestij a sum of RM7,410,000.00 LAD based on the Learned Sessions Court Judge’s decision in Keller’s Garnishee Proceeding.

02.03.2021 OS 132 was dismissed wherein Macly was ordered to pay the costs of RM20,000.00 (subject to allocator fees) to Prestij.

10.03.2021 Prestij had to file an application for Fortuna Injunction against Macly to prevent Macly from presenting winding up S/N vEq1MIslTkoae/xk1Os1w petition against Prestij based on the alleged RM7,410,000.00 LAD (“OS 111”).

09.07.2021 OS 111 was allowed by the learned Judicial Commissioner with costs RM12,000.00 (subject to allocator fees).

15.10.2021 The Court of Appeal dismissed Macly’s appeal for OS 132 and Macly is ordered to pay Prestij costs of RM10,000.00 (subject to allocator fees).

28.04.2022 The Court of Appeal dismissed Macly’s appeal for OS 111 and Macly is ordered to pay Prestij costs of RM15,000.00 (subject to allocator fees).

After considering the above chronology of events, I find that the Plaintiff’s aforesaid contention on this issue is without basis it would appear that the Defendant’s attempt to pursue their legal rights has been constantly opposed to by the Plaintiff from the year 2020, which had led to the delay in the commencement and initiation by the Defendant of the Adjudication proceedings. Dispute Pending Final Determination via Arbitration

This Court is also well aware that the Stay application of the AD herein is inter alia applied for on the basis of and pending the final disposal of the arbitration proceedings between the Plaintiff and the Defendant.

I have observed that the Notice of Arbitration which concerned the dispute before this Court between the parties was only issued by the Plaintiff on 28.4.2023. S/N vEq1MIslTkoae/xk1Os1w

I agree with learned counsel for the Defendant, on the point that the dispute between the parties pending final determination via arbitration as raised by the Plaintiff as a ground for the stay application in Enclosure 5, that the Plaintiff has taken an inconsistent position here as it has on the one hand alleged that the matter or dispute has been finally decided by the Sessions Court as stated above but on the other hand the Plaintiff seeks to refer the matter or dispute to be resolved via Arbitration.

This is a clear cut case of the Plaintiff approbating and reprobating on its stand which this Court consequently finds that the Plaintiff, as a result thereof, cannot and should not now be allowed to use the dispute between the parties pending final determination via arbitration as a ground to support Enclosure 5. I rely on the Court of Appeal authority provided to me by the Defendant’s counsel which is Konsortium Lebuhraya Utara-Timur (Kl) Sdn Bhd v Liew Choong Kin [2018] 3 MLJ 354 where the said Appellate Court held: “[25] Based on the above actual facts, the respondent could be said to be taking a different stance before the court in this action and under the law he was not allowed to blow hot and cold in the attitude that he adopts. The learned judge failed to consider that the respondent’s claim for trespass and the claim he had already made at the second enquiry arose from the same facts. He should accordingly be estopped from commencing this action. The respondent having made a choice at the second enquiry could be treated as having made an election from which position he should not be allowed to abandon. He had taken a benefit arising out of the course of conduct which he had pursued earlier and with which S/N vEq1MIslTkoae/xk1Os1w his subsequent conduct was inconsistent with his election. The respondent should not be at liberty to approbate and reprobate having taken a particular position. Reference in this connection could be made to the decision of this court in Kelana Megah Development Sdn Bhd v Kerajaan Negeri Johor and another appeal [2018] 3 MLJ 354 at 369[2016] MLJU 1649; [2016] 8 CLJ 804 wherein it was held at p 814 (emphasis added to highlight the similarities): [20] The appellant’s conduct as described hereinbefore is plainly inconsistent and contradictory. The alleged rights pursued and relief sought through the present action are remarkably inconsistent with and contradict the right pursued and relief sought in the land references. … The appellant’s conduct, as it were, could thus be properly described as blowing hot and cold that while the appellant approved the acquisitions they also rejected it. The appellant is not permitted to approbate and reprobate on the issue of the acquisition of the seven plots of land. … [22] Further, in Cheah Theam Kheng v City Centre Sdn Bhd (In Liquidation) & Other Appeals [2012] 1 MLJ 761; [2012] 2 CLJ 16, this court cited with approval the English case of Express Newspaper plc v News (UK) Ltd And Others [1990] 3 All ER 376 wherein it was stated: In the words of Sir Nicolas Browne-Wilkinson VC in Express Newspaper plc v News (UK) Ltd and others [1990] 3 All ER 376, at pp 383-384: There is a principle of law of general application that it is no possible to approbate and reprobate. That means you are not S/N vEq1MIslTkoae/xk1Os1w allowed to blow hot and cold in the attitude that you adopt. A man cannot adopt two inconsistent attitudes towards another: he must elect between them and, having elected to adopt one stance, cannot thereafter be permitted to go back and adopt an inconsistent stance. (Emphasis added.) [23] The decision of this court in Tenaga Nasional Bhd v Irham Niaga Sdn Bhd & Anor [2011] 1 MLJ 752; [2011] 1 CLJ 491 is also instructive. We reproduce the relevant excerpts below: Estoppel by election is related to the principle that a person may not approbate and reprobate (Lissenden v CAV Bosch, Limited [1940] AC 412 p 478; [1940] 1 All ER 425 at p 429 (HL)). Thus, a person having a choice between two courses of conduct is to be treated as having made an election from which he cannot resile. But the person will not be regarded as having so elected unless he has taken a benefit under or a raising out of the course of conduct which he has first pursued and with which his subsequent conduct is inconsistent with his election. (Banque des Marchands de Moscou (Koupetschesky) v Kindersley and another [1951] Ch 112 at pp 119-120; [1950] 2 All ER 549 at p 552 (CA); Ex parte Robertson, In re Morton (1875) LR 20 Eq 733; and Evans v Bartlam) … If person is entitled to one two inconsistent rights, as opposed to having a choice between two alternative remedies (United Australia, Limited v Barclays Bank, Limited [1941] AC 1 at p 29; [1940] 4 All ER 20 at p 37 (HL)) and, with an open mind and with full knowledge he does an unequivocal act showing that he has chosen one, he cannot afterwards pursue the other (Slough Estates Ltd v Slough Borough Council and another (No 2) [1969] 2 Ch 305; [1969] 2 All ER 988 (CA)).” S/N vEq1MIslTkoae/xk1Os1w

In the circumstance, this Court is not in favour of granting the Stay as prayed in and as per Enclosure 5 and dismisses the same with costs in the cause but the court is exercising its powers in accordance with prayer 3 of Enclosure 5 to grant a stay of the AD on the express condition that the Adjudicated Sum be deposited in a joint stakeholders account to be held by both the Plaintiff and Defendant’s solicitors by 19.6.2023 and the sum to be released to the successful party within 7 working days of the disposal by this Court of the Setting Aside of the AD failing which the conditional Stay hereby granted will be of no effect. Dated: 06th day of June 2023 sgd. NADZARIN WOK NORDIN HIGH COURT JUDGE CONSTRUCTION COURT 1 COUNSEL FOR THE PLAINTIFF: Yap Boon Hau and Fang Kai Loon (Messrs Mah-Kamariyah & Philip Koh] COUNSEL FOR THE DEFENDANT: Ong Chee Kheng and Khoon Chin Ern (Messrs CK Oon & Co.] S/N vEq1MIslTkoae/xk1Os1w