Marvelane Home Sdn Bhd v Sunshine Construction Sdn Bhd (BA-24C-44-08/2021)

This judgment concerns following three originating summonses (3 OS):

Sunshine Construction Sdn. Bhd. (Sunshine) has filed OS no. BA- 24C-24-05/2021 (Enforcement OS) against Marvelane Home Sdn. Bhd. (Marvelane) for leave of court to enforce an adjudication decision made on 19.4.2021 (AD) by an adjudicator, Puan Eleena Nasreen Bt. A. Bakar Effendi (Adjudicator), in favour of Sunshine against Marvelane;

in OS no. BA-24C-44-08/2021 (Setting Aside OS), Marvelane has applied for a court order to set aside the AD; and

Marvelane has also filed OS no. BA-24C-45-08/2021 (Stay OS) for an order to stay the enforcement of the AD pending the disposal of an arbitration between Marvelane and Sunshine (Arbitration). B. Salient facts

Marvelane appointed Sunshine to perform construction work (Works) in a residential development project in Putra Heights, Selangor Darul Ehsan (Project) by way of a contract which consisted of the following documents, among others (Contract):

a “Letter of Award” dated 28.7.2017 (LA);

“Agreement and Conditions of PAM Contract 2006 (With Quantities)” (PAM Contract 2006). The PAM Contract 2006 contains the following documents -

“Articles of Agreement” (AA); and

“The Conditions of Contract” (COC). Marvelane and Sunrise have agreed to certain amendments and supplements to the

“Supplementary Agreement” dated 19.3.2019 (SA).

The following provisions in the Contract are relevant:

clause 6 LA has provided for the Project to be completed on certain dates for specific kinds of Works and upon Sunshine’s failure to do so, liquidated damages (LD) (at rates stipulated in that clause for certain kinds of Works) shall be imposed by Marvelane on Sunshine;

according to the AA -

Article 2 AA stipulates that the “Contract Sum” is RM44,126,401.61;

the Project’s architect (Architect) is Garis Architects Sdn. Bhd. - Article 3 AA; and

Article 5 AA provides that QS Associates Sdn. Bhd. has been appointed as the Project’s Quantity Surveyor (QS);

the COC provides as follows -

clause 25.4(d) [Clause 25.4(d)] states that when Marvelane terminates Sunshine’s employment under the Contract, among others -

Sunshine shall be liable to Marvelane for “all cost incurred to complete the Works including all direct loss and/or expense suffered by” Marvelane;

(ii) until the Works are completed under clause 25.4(a) COC, Marvelane “shall not be bound by any provision in the Contract to make any further payment to” Sunshine, including payments which have been certified but not yet paid when Sunshine’s employment under the Contract was terminated by Marvelane; and

(iii) upon the completion of the Works, an account taking into consideration of the value of the Works carried out by Sunshine and all cost incurred by Marvelane to complete the Works including loss and/or expense suffered by Marvelane, shall be incorporated in a final account (Final Account) prepared in accordance with clause 25.6 (Clause 25.6);

according to Clause 25.6, among others, within 6 months from the completion of the Works, the Final Account shall be submitted by the Architect or QS to Marvelane and Sunshine for their agreement and the Final Account shall include sums previously certified to Sunshine before Marvelane’s termination of Sunshine’s employment under the Contract;

clause 26.6(a) [Clause 26.6(a)] provides that, among others, if Sunshine terminates its own employment under the Contract -

within 6 months after Sunshine’s termination of its own employment under the Contract, Sunshine shall submit the Final Account to Marvelane, Architect and QS for Marvelane’s agreement,; and

(ii) if the Final Account is not disputed by Marvelane within 3 months from the date of Marvelane’s receipt of the Final Account from Sunshine, the Final Account shall be conclusive and deemed agreed to by the parties;

clause 26.6(b) [Clause 26.6(b)] states as follows -

if Marvelane disputes the Final Account, Marvelane shall give written notice to Sunshine [which sets out Marvelane’s disagreement with the Final Account (Marvelane’s Disagreement)] within 3 months from the date of Marvelane’s receipt of the Final Account from Sunshine;

(ii) upon receipt of Marvelane’s Disagreement, Sunshine may amend or not the Final Account; and

(iii) if Marvelane disputes the amended Final Account (by Sunshine) or if Sunshine does not amend the Final Account (upon Marvelane’s Disagreement), Marvelane may refer the dispute to Arbitration within the time period stipulated in Clause 26.6(b);

clause 26.7 (Clause 26.7) provides that the provisions in Clause 26 are without prejudice to any other right and/or remedy which Sunshine may possess; and

according to clause 30.1 (as amended by the parties) (Clause 30.1), among others -

Sunshine “shall submit a payment application at the Interim Claim Interval stated in the Appendix [to the COC] with complete details and particulars as required by” the

(ii) the Architect, after having received the “payment valuation” from the QS, “shall” issue an interim certificate (IC) to Marvelane with a copy to Sunshine; and

(iii) Sunshine “shall be entitled to payment thereafter within the “Period of Honouring Certificates” [provided in the Appendix to the COC - please refer to Article 7(ap) AA]; and

according to the SA -

clause 3.1(a) provides that Marvelane agrees to make part payment of RM4,000,000.00 [of the total outstanding sum of RM4,937,472.85 (Total Outstanding Sum), being the unpaid certified sum as at 24.8.2019] to Sunshine in accordance with “milestones” specified in that clause;

clause 3.1(i) has reinstated clause 30.7 COC (Clause 30.7). Clause 30.7 states that, among others, if Marvelane fails to pay Sunshine the amount due as shown in the IC (less any LD and set-off which Marvelane is expressly entitled to make under the Contract) and continues such a default for 14 days upon the receipt of Sunshine’s written notice for Marvelane’s payment within 14 days, Sunshine may by further written notice, “forthwith suspend the execution of the Works until such time payment is made” by Marvelane; and

clause 3.1(j) stipulates that, among others, Sunshine’s rights to claim for the Total Outstanding Sum and other sums for the completion of the Project are not in any way waived by the SA.

Sunshine had submitted “Progress Claim” nos. 17 to 23 (Progress Claim nos. 17 to 23) for Works which had been completed for the period of May 2019 to May 2020. The total amount claimed by Sunshine in Progress Claim nos. 17 to 23 was RM5,189,973.89.

After the QS had valued the Works claimed in Progress Claim nos. 17 to 23, the Architect issued IC nos. 17 to 23 which certified under Clause 30.1 that a sum of RM3,235,522.50 should be paid by Marvelane to Sunshine [Total Certified Sum (IC nos. 17 to 23)].

With regard to the Total Certified Sum (IC nos. 17 to 23), Marvelane had only paid RM135,495.09 to Sunshine (Marvelane’s Part Payment). Hence, there was still an outstanding sum of RM3,100,027.41 due from Marvelane to Sunshine regarding IC nos. 17 to 23 [Outstanding Certified Sum (IC nos. 17 to 23)]. C. Adjudication proceedings (AP)

Sunshine’s “Payment Claim” (PC) was based solely on IC nos. 17 to 23 and claimed for Marvelane’s payment to Sunshine of the Outstanding Certified Sum (IC nos. 17 to 23).

Marvelane’s “Payment Response” (PR) had resisted the PC on the following grounds, among others:

there was no sum due under the Contract from Marvelane to Sunshine. As such, Sunshine’s PC was premature and baseless;

Sunshine’s PC had breached s 5 of the Construction Industry Payment and Adjudication Act 2012 (CIPAA);

Sunshine had failed to complete the Works within the milestones stipulated in the Contract [Alleged Sunshine’s Delay (Works)];

the Works performed by Sunshine were defective [Alleged Defects (Works)];

in June 2020, Sunshine had unlawfully suspended Works [Alleged Sunshine’s Unlawful Suspension (Works)];

Sunshine had wrongfully terminated the Contract on 23.7.2020 [Alleged Sunshine’s Wrongful Termination (Contract)]; and

as against the Outstanding Certified Sum (IC nos. 17 to 23), Marvelane was entitled to set off the following sums -

LD should be paid by Sunshine to Marvelane due to the Alleged

Marvelane had to rectify the Alleged Defects (Works). As such, Marvelane had to bear the cost of rectification of the Alleged

as a result of the Alleged Sunshine’s Delay (Works), Alleged Sunshine’s Unlawful Suspension (Works) and Alleged Sunshine’s Wrongful Termination (Contract), Marvelane had to incur cost of “acceleration works” [Cost (Acceleration Works)], ie. cost to accelerate the works in the Project so as to minimize the delay in the completion of the Project; and

in view of the Alleged Sunshine’s Wrongful Termination (Contract), Marvelane had to incur additional cost in the appointment of a third party contractor to complete the Project [Additional Cost (Completion of Project)].

The Adjudicator delivered the AD as follows, among others:

Marvelane shall pay the Outstanding Certified Sum (IC nos. 17 to 23) to Sunshine; and

interest on the Outstanding Certified Sum (IC nos. 17 to 23), costs of the adjudication proceedings as well as all other costs and fees (Total AD Sum) shall be paid by Marvelane to Sunshine as stipulated in the AD. D.

Court’s approach I adopt the following approach in deciding these 3 OS:

the Setting Aside OS will be determined first;

after the Setting Aside OS has been decided, the court will consider the Stay OS; and

lastly, the court will determine the Enforcement OS The reasons for the above approach have been explained in Otis Elevator Co (M) Sdn Bhd v Castmet Sdn Bhd [2020] MLJU 2306, at [7]. E.

Issues The following questions arise in these 3 OS:

regarding the Setting Aside OS -

did the Adjudicator have “jurisdiction” under CIPAA to adjudicate Sunshine’s PC (Adjudicator’s Jurisdiction)? In this regard -

as required by s 5(2)(b) CIPAA, whether the contents of Sunshine’s PC had disclosed, either expressly or impliedly, Sunshine’s cause of action against Marvelane under the Contract which entitled Sunshine to claim from Marvelane in the AP for the Outstanding Certified Sum (IC nos. 17 to 23) [Sunshine’s Cause of Action (IC nos. 17 to 23)];

(ii) if Sunshine’s Cause of Action (IC nos. 17 to 23) has been disclosed in Sunshine’s PC, can Marvelane adduce evidence and present legal submission to persuade the Adjudicator and subsequently, the court hearing the 3 OS, that Sunshine has no cause of action to claim in the AP for the Outstanding Certified Sum (IC nos. 17 to 23)?;

(iii) whether the Adjudicator’s Jurisdiction can be negated by Sunshine’s breaches of the Contract and certain provisions in the Contract which favour Marvelane; and

(iv) did Sunshine’s PC breach s 5(2)(a) to

CIPAA [Sunshine’s Breach (Section 5)]? This issue also discusses the application of the “curing” provision in s 26(1) CIPAA;

if the Adjudicator had jurisdiction under CIPAA to adjudicate

whether the Adjudicator’s Jurisdiction is ousted by

(ii) did the Adjudicator exceed her jurisdiction within the meaning of s 15(d) CIPAA when she did not decide that Sunshine’s Breach (Section 5A) had been committed;

is Clause 25.4(d) void under s 35(1) CIPAA?; and

whether the Adjudicator had breached the second rule of natural justice (2nd Rule) under ss 15(b) and 24(c) CIPAA when she decided that Sunshine did not wrongfully suspend the Works under Clause 30.7;

if the Setting Aside OS is dismissed, should the court exercise its discretion under s 16(1)(b) CIPAA to allow the Stay OS?; and

if both the Setting Aside OS and Stay OS are refused, whether the the Enforcement OS should be allowed pursuant to s 28(1) and (2) CIPAA.

I am not able to find any previous Malaysian case regarding the issues raised in the above sub-paragraphs 11(1)(a)(iii) and (b)(i).

Object of CIPAA [Object (CIPAA)] As explained by Mohd. Zawawi Salleh FCJ in the Federal Court case of Martego Sdn Bhd v Arkitek Meor & Chew Sdn Bhd and another appeal [2019] 5 AMR 516, at [51], the Object (CIPAA) is to ensure that parties who have performed “construction work” (defined widely in s 4 CIPAA), are paid for the work and are not deprived of cash flow (the life-blood of the construction industry). The Object (CIPAA) is clear from 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”).

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 Premium Vegetable Oils Sdn Bhd [2004] 2 CLJ

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 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 (c) 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). G. Whether Adjudicator had jurisdiction under CIPAA to adjudicate Sunshine’s PC?

The following provisions in CIPAA are relevant: “5. Payment claim

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 has made under [CIPAA].

Payment response …

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 reasons for the dispute. … Adjudication and decision 12(1) The adjudicator shall conduct the adjudication in the manner as the adjudicator considers appropriate within the powers provided under section 25. …

Effect of adjudication decision The adjudication decision is binding unless -

it is set aside by the High Court on any of the grounds referred to in section 15; …

there has been a denial of natural justice; …

the dispute is finally decided by arbitration or the court. 16 15. Improperly procured adjudication decision An aggrieved party may apply to the High Court to set aside an adjudication decision on one or more of the following grounds: …

the adjudicator has acted in excess of his jurisdiction.

Duties and obligations of the adjudicator 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; … Powers of the adjudicator 25. The adjudicator shall have the powers to - …

order the discovery and production of documents;

set deadlines for the production of documents; …

call for meetings with the parties; …

issue any direction as may be necessary or expedient; …

Jurisdiction of adjudicator

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. …

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).

There are two different grounds to set aside an adjudication decision, namely -

an adjudicator has no jurisdiction to adjudicate the matter under CIPAA (Lack of Jurisdiction Argument); or

an adjudicator has jurisdiction to adjudicate the matter under s 27(1) read with ss 5 and 6 CIPAA but has exceeded such a jurisdiction within the meaning of s 15(d) CIPAA (Excess of Jurisdiction Argument) - please refer to MKP Builders Sdn Bhd v PC Geotechnic Sdn Bhd [2020] MLJU 1927, at [13] and [14].

In support of the Setting Aside OS, Marvelane’s learned counsel has not relied on Lack of Jurisdiction Argument. However, according to Marvelane’s learned counsel, the Adjudicator had exceeded her jurisdiction to adjudicate Sunshine’s PC when she did not decide either one or both of the following two matters in Marvelane’s favour [Marvelane’s 2 Contentions (Jurisdiction)]:

there was no sum of money [including the Outstanding Certified Sum (IC nos. 17 to 23)] due from Marvelane to Sunshine under the Contract [Marvelane’s 1st Contention (Jurisdiction)]; and

Sunshine’s Breach (Section 5) had been committed [Marvelane’s 2nd Contention (Jurisdiction)].

In view of Marvelane’s 1st Contention (Jurisdiction), I should first decide whether the Adjudicator had “jurisdiction” to adjudicate Sunshine’s PC under CIPAA. This is because if Marvelane’s 1st Contention (Jurisdiction) is correct, Sunshine has no cause of action under the Contract to claim in AP for any sum of money from Marvelane, let alone the Outstanding Certified Sum (IC nos. 17 to 23). In such an event, the Adjudicator has no jurisdiction under CIPAA to adjudicate Sunshine’s PC and the court should set aside the AD based on this ground alone. I should state that Marvelane’s 1st Contention (Jurisdiction) is a Lack of Jurisdiction Argument and not an Excess of Jurisdiction Argument. G(1). Did Sunshine have cause of action under Contract against Marvelane?

According to Marvelane’s learned counsel, no sum of money [including the Outstanding Certified Sum (IC nos. 17 to 23)] was due from Marvelane to Sunshine under the Contract because -

Sunshine had breached Clause 30.7 when Sunshine failed to give written notice to Marvelane of the Alleged Sunshine’s Unlawful Suspension (Works) [Alleged Sunshine’s Breach (Clause 30.7)];

by reason of -

Clause 25.4(d) (when Marvelane terminates Sunshine’s employment under the Contract); or

Clause 26.6(a) or (b) (when Sunshine determines its own employment under the Contract) - Marvelane is not bound to pay any sum of money to Sunshine [including the Outstanding Certified Sum (IC nos. 17 to 23)];

the Final Account has yet to be prepared in this case. Consequently, Marvelane is not liable to Sunshine for any sum of money [including the Outstanding Certified Sum (IC nos. 17 to 23)]; and

Marvelane was entitled to claim from Sunshine or set off against the Outstanding Certified Sum (IC nos. 17 to 23) the following sums of money due to the Alleged Sunshine’s Breach (Clause 30.7) or other breaches of the Contract by Sunshine (Marvelane’s Claim/Set-Off) -

Sunshine shall be liable to Marvelane for LD due to the Alleged

Rectification Cost should be borne by Sunshine as a result of the Alleged Defects (Works);

Sunshine shall pay Cost (Acceleration Works) to Marvelane owing to the Alleged Sunshine’s Delay (Works), Alleged Sunshine’s Unlawful Suspension (Works) and

as a result of the Alleged Sunshine’s Wrongful Termination (Contract), Marvelane can claim for Additional Cost (Completion of Project) from Sunshine.

Learned counsel for Marvelane and Sunshine have referred to certain parts of the judgment of Lee Swee Seng J (as he then was) in the High Court case of Terminal Perintis Sdn Bhd v Tan Ngee Hong Construction Sdn Bhd and another case [2017] MLJU 242. It is decided in Terminal Perintis, at [52], [59], [61], [62], [73], [76], [86], [96] and [97], as follows: “[52] In other words, if the complaint is about the contents of the Payment Claim as in whether it shows a cause of action and the provisions of the contract relating to the claim, that is a matter that the Adjudicator has jurisdiction to decide, rightly or wrongly. For this Court to interfere with his finding on the validity of the Payment Claim from that perspective would be to descend into the merits of his findings, which is not permitted by s 15 CIPAA in a setting aside application. This is not a case where the complaint of the validity of the Payment Claim affects the validity of his appointment as Adjudicator such as in a case where the Payment Claim was not served at all. … [59] No doubt the expression of a “cause of action” is used in s 5(2)(b) CIPAA but that is nothing more than saying that the Claimant must set out the basis of their claim in contract. … [61] If the Payment Claim were to be a Statement of Claim, I do not think that the defendant would be able to strike out the claim on the ground that there is no valid cause of action pleaded. In fact the test would be that the Court assumes the pleadings of facts to be true and based on such a plea, would there be a cause of action. I do not think we should exact a stiffer requirement of Adjudicators when it comes to determining whether there was a valid Payment Claim for the Adjudicator to assume jurisdiction. Beyond that, it becomes a question of evidence and finding of fact or a mixed question of fact and law which this Court has no business to interfere unless the grounds for setting aside are made out under s 15 CIPAA. Whether or not the Claim could succeed would be for trial in a case of litigation in as much as in an Adjudication, it would be for the Adjudicator to decide. [62] I would hold that the Payment Claim served herein is a valid Payment Claim in that prima facie, it purports reasonably to have complied with the requirements of s 5(2) CIPAA. … [73] If it is a question of the competence of the Adjudicator as in he has not been properly appointed in that what purported to be a Payment Claim, is not on the face of it a Payment Claim or that the Payment Claim was not served or that it was not expressly stated as a claim made under CIPAA, then this Court would be at liberty to set aside the Adjudication Decision on ground of excess of jurisdiction. This is not only because the Adjudicator cannot decide on his own competence or capacity to adjudicate when the very validity of his appointment is questioned but also that it is part of the legislative intent that if there is non-compliance with a basic and essential requirement of CIPAA with respect to a Payment Claim under s 5, then the Adjudication Proceedings and the Decision made would be a nullity. … [76] The question of the lack of a proper cause of action has nothing to do with the validity of the Adjudicator’s appointment as in his competence to hear the dispute but at most, it has to do with the exercise of his jurisdiction with respect to the validity of his Decision.” … [86] I agree with the above analysis is being in accord with our scheme of statutory adjudication under CIPAA. When a challenge is made to the Payment Claim filed as lacking in details in that it does not disclose a valid cause of action, that is a challenge on merits assuming that the Payment Claim has complied outwardly with the requirements of s 5(2)(b) CIPAA. It has nothing to do with the validity of the appointment of the Adjudicator. The Adjudicator appointed would then have to consider the merits of whether there exists a valid cause of action with respect to the matters raised in the Payment Claim and the Payment Response. … [96] It is well within the power and province of the Adjudicator to decide on the validity of the Payment Claim served as in whether at the end of the day, there is a valid cause of action shown, after hearing the evidence and considering the submissions of counsel on the proper interpretation to be given to relevant provisions of the PAM Contract. [97] That would involve going into the merits of the case and this Court would not generally interfere with such a finding of mixed law and fact unless the circumstances under s 15 CIPAA have been shown.” (emphasis added).

When a respondent in adjudication proceedings alleges in a PR or “Adjudication Reply” (AR) [served by that the respondent under s 10(1) CIPAA] that the PC does not disclose a cause of action for a claimant to claim from the respondent for construction work done under a construction contract (Contractual Cause of Action), I am of the following view:

s 5(2)(b) CIPAA requires a PC to include “details to identify the cause of action”. Hence, an adjudicator should first peruse the contents of the PC [Contents (PC)] and decide whether the Contents (PC) have disclosed, either expressly or impliedly, a Contractual Cause of Action;

if the Contents (PC) do not disclose, either expressly or impliedly, a Contractual Cause of Action, the adjudicator has the following three options -

the adjudicator may dismiss the adjudication claim on the sole ground that the adjudicator has no jurisdiction under CIPAA to adjudicate the PC due to the fact that the Contents (PC) do not disclose a Contractual Cause of Action (Adjudicator’s 1st Option). If the Adjudicator’s 1st Option is exercised, a claimant may serve a second PC and hopefully the second PC discloses a Contractual Cause of Action (to avoid the allegation that a claimant has abused the right to commence adjudication proceedings under CIPAA). This is because claimants are not estopped in any manner by the exercise of the Adjudicator’s 1st Option. It is decided in Mega Mayang M&E Sdn Bhd v Dutamasa Sdn Bhd and another case [2022] 1 MLRH 164, at [52], as follows: “[52] As explained in the above sub-paragraph 49(3), the Adjudication Proceedings (Excellent Builders) do not concern the Defendants and the Defendants cannot therefore rely on the Adjudication Proceedings (Excellent Builders) to support the 2 Striking Out Applications. Having said that, even if the Adjudication Proceedings (Excellent Builders) have been adjudicated in favour of Excellent Builders against the Plaintiff (2nd Suit) [Adjudication Decisions (Excellent Builders)], the court is not bound in any manner by the Adjudication Decisions (Excellent Builders), their findings, reasons and reasoning. This view is premised on the following reasons:

in accordance with 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 - please refer to MRCB Builders v Wazam Ventures [2020] 5 MLRH 138, at [13(1)(d)];

UK’s Housing Grants, Construction and Regeneration Act 1996 (HGCR) concerns adjudication proceedings. As such, decisions of UK courts regarding adjudication decisions pursuant to HGCR are persuasive in our courts. My research has revealed a judgment of Lord Mance in UK’s Supreme Court case of Aspect Contracts (Asbestos) Ltd v Higgins Construction plc [2015] 4 All ER 482, at [32], as follows - “[32] One further point requires stating. In finally determining the dispute between Aspect and Higgins, for the purpose of deciding whether Higgins should repay all or any part of the £658,017 received, the court must be able to look at the whole dispute. Higgins will not be confined to the points which the adjudicator in his or her reasons decided in its favour. It will be able to rely on all aspects of its claim for £822,482 plus interest. That follows from the fact that the adjudicator's actual reasoning has no legal or evidential weight. All that matters is that a payment was ordered and made, the justification for which can and must now be determined finally by the court. Similarly, if Aspect’s answer to Higgins's claim to the £490,627 plus interest ordered to be paid had been not a pure denial of any entitlement, but a true defence based on set-off which the adjudicator had rejected, Aspect could now ask the court to re-consider and determine the justification for that defence on its merits.” (emphasis added). It is clear from Aspect Contracts that the court or arbitral tribunal is not bound in any manner by any adjudication decision, let alone be estopped by such an adjudication decision;

an adjudicator is not required by CIPAA to be legally qualified. Nor does CIPAA require an adjudicator to have experience in legal practice regarding construction matters;

by reason of s 12(9) CIPAA, the Evidence Act 1950 does not apply to adjudication proceedings;

generally, an adjudicator does not conduct oral hearing. As such, there is no cross-examination of relevant witnesses in adjudication proceedings; and

an adjudicator is required to deliver an adjudication decision 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 non-compliance with s 12(2)(a) to

CIPAA will render the adjudication decision void - please see s 12(3) CIPAA. In view of the strict timelines imposed on adjudicators to deliver adjudication decisions, there is always a possibility that adjudicators may have committed error(s) of law and/or fact in making their adjudication decisions.” (emphasis added);

the adjudicator has an option under s 27(3) CIPAA to complete the adjudication and deliver the adjudication decision without prejudice to the respondent’s right to apply to court to set aside the adjudication decision and/or to oppose the claimant’s application to enforce the adjudication decision under s 28 CIPAA (Adjudicator’s 2nd Option); or

the adjudicator may exercise his or her powers under s 12(1) read with s 25(b), (c), (f), (g) and (j) CIPAA to inquire from the claimant on whether the latter wishes to amend the PC so as to disclose a Contractual Cause of Action (Adjudicator’s 3rd Option). If the Adjudicator’s 3rd Option is exercised, the respondent should be allowed to object to the claimant’s application to amend the PC and if the adjudicator allows an amendment of the PC to disclose a Contractual Cause of Action, all parties have the right to adduce evidence and present legal submission to the adjudicator on the amended PC; I am in favour of the Adjudicator’s 3rd Option because the exercise of the Adjudicator’s 3rd Option attains the Object (CIPAA). Having said that, in exercising the Adjudicator’s 3rd Option, the adjudicator runs the risk of not being able to deliver the adjudication decision within the tight time period which has been stipulated in s 12(2)(a) or (b) CIPAA (whichever is applicable). However, by virtue of s 12(2)(c) CIPAA, an adjudication decision may be delivered within an extended time period as agreed by the parties; and

if the Contents (PC) disclose, either expressly or impliedly, a Contractual Cause of Action -

the respondent is entitled to adduce evidence and present legal submission to persuade the adjudicator that notwithstanding the Contents (PC) (which disclose a Contractual Cause of Action), the claimant has in fact no Contractual Cause of Action (Respondent’s Evidence/Submission) - please refer to Terminal Perintis, at [86] and [96]. In such a case, it is up to the adjudicator to accept or reject the

if an adjudicator has rejected the Respondent’s Evidence/Submission (ie. the claimant has a Contractual Cause of Action to claim under CIPAA) and delivers an adjudication decision in favour of the claimant, in the respondent’s application to court to set aside the adjudication decision or the claimant’s application for leave of court to enforce the adjudication decision, the court may consider afresh the Respondent’s Evidence/Submission. In this regard, with respect, I depart from the decision in Terminal Perintis, at [52], [61] and [97] (which has decided that the court should not intervene in respect of the merits of the dispute before the adjudicator). This is because if an adjudicator has erroneously decided that there exists a Contractual Cause of Action, such an error deprives the adjudicator of the jurisdiction to adjudicate the claim under CIPAA and ipso facto, the court should set aside the adjudication decision.

I have perused the contents of Sunshine’s PC. I have no hesitation to decide that Sunshine’s PC, in particular paragraphs 5 to 12, had expressly disclosed Sunshine’s Cause of Action (IC nos. 17 to 23). Additionally, the following reasons fortify Sunshine’s Cause of Action (IC nos. 17 to 23):

by virtue of Clause 30.1, Sunshine “shall be entitled” to the Outstanding Certified Sum (IC nos. 17 to 23) from Marvelane; and

Marvelane’s Part Payment (a substantial sum of RM135,495.09) supported Sunshine’s Cause of Action (IC nos. 17 to 23). If otherwise, Marvelane’s Part Payment would not have been made. In view of the accrual of Sunshine’s Cause of Action (IC nos. 17 to 23), this court finds as follows:

Sunshine’s PC has complied with s 5(2)(b) CIPAA;

Sunshine’s PC is neither premature nor baseless; and

Sunshine has not abused the adjudication procedure under CIPAA.

As Sunshine’s Cause of Action (IC nos. 17 to 23) had been disclosed in Sunshine’s PC, the Adjudicator had jurisdiction to adjudicate Sunshine’s PC under s 27(1) read with s 5 CIPAA.

In response to the submission by MarveIane in the above paragraph 19, I decide as follows:

the accrual of Sunshine’s Cause of Action (IC nos. 17 to 23) (please refer to the above paragraph 22) and the Adjudicator’s Jurisdiction (please see the above paragraph 23) cannot be negated by -

the Alleged Sunshine’s Breach (Clause 30.7) and any other breach(es) of the Contract by Sunshine [including the Alleged Sunshine’s Delay (Works) and Alleged Sunshine’s Wrongful Termination (Contract)] [referred collectively in this judgment as “Alleged Sunshine’s Breaches (Contract)]”;

Clause 25.4(d);

the fact that the Final Account has not been prepared in accordance with -

Clause 25.6; or

(ii) Clause 26.6(a) or (b); and

Marvelane’s Claim/Set-Off;

the Alleged Sunshine’s Breaches (Contract) entitle Marvelane to -

oppose Sunshine’s PC in the AP; and

commence the Arbitration against Sunshine. If a contracting party (X) has a cause of action under the contract against the other contracting party (Y) to claim for a sum of money due from Y to X under the contract (X’s Cause of Action), Y cannot deny X’s Cause of Action by alleging that X has breached the contract for which X is liable to Y pursuant to the contract. Nor can X’s Cause of Action be negated by Y’s reliance on provisions in the contract which favour Y. Needless to say, Y can oppose any claim by X based by X’s Cause of Action in adjudication proceedings, litigation or arbitration (whichever the case may be) by raising X’s breach(es) of the contract as well as by relying on the relevant contractual provisions;

if I have accepted Marvelane’s contentions as elaborated in the above paragraph 19, a claimant who has performed “construction work” (as understood in s 4 CIPAA) cannot serve a PC under s 5(1) CIPAA merely because the claimant has breached the contract and there are contractual provisions which do not favour the claimant. Such an outcome defeats the Object (CIPAA). Worse still, “non-paying parties” (within the meaning of s 4 CIPAA) may circumvent CIPAA by alleging that the “unpaid parties” (as defined in s 4 CIPAA) have breached the relevant construction contracts and there are contractual provisions which favour non-paying parties;

s 35(1) CIPAA has rendered Clause 25.4(d) void - please refer to Part I below; and

Marvelane cannot rely on Clause 26.6(a) and (b) because Clause 26.7 has expressly provided that the provisions in Clause 26 do not prejudice Sunshine’s other right and remedy under Clause 30.1.

I have not overlooked the SA. Clause 3.1(j) SA has provided that, among others, Sunshine’s right under Clause 30.1 to claim for the Outstanding Certified Sum (IC nos. 17 to 23) from Marvelane is not in any manner waived by the SA. Accordingly, the SA does not support Marvelane’s 1st Contention (Jurisdiction).

G(2). Whether Sunshine’s PC had complied with s 5 CIPAA Marvelane’s learned counsel has relied on the following judgment of Lim Chong Fong J in the High Court in Giatreka Sdn Bhd v SGW Engineering Construction Sdn Bhd and another appeal [2019] MLJU 1477, at [19], [26], [32] to [34], [36] and [40]: “[19] In respect of the former, Mr. Gomez submitted that the purported Payment Claim is defective, invalid and an abuse of process because it did not comply with the mandatory requirements of s 5(2) of the CIPAA. … … [26] It does not seem to be in dispute by the parties here that if either the payment claim is defective or was not properly served in contravention or non-compliance of the CIPAA, then the adjudicator’s jurisdiction is annulled because the validity of the adjudicator’s appointment is impugned. I thought so too and hold accordingly; see also Rentak Segar Sdn Bhd v Transmission Technology Sdn Bhd [2018] 1 LNS 2130 and SKS Pavilion Sdn Bhd v Tasoon Injection Pile Sdn Bhd [2019] 9 MLJ 396. … [32] First and foremost, I noticed that the provision in s 5(2) of the CIPAA on the requisite contents of a payment claim has been couched in imperative language. … There is hence no doubt that compliance of the requirements set out in s 5(2) of the CIPAA is strict and mandatory. [33] The validity of the Payment Claim therefore hinges upon whether the provisions in s 5(2) of the CIPAA are met. Upon plain and ordinary construction of the Payment Claim, I am not satisfied that the cause of action and the corresponding identified applicable provision(s) of the Contract have been expressly met by SWG in the Payment Claim. They are conspicuously absent and there is no room for implication or inference. In addition, I am also not satisfied that there is a proper express statement that it is a claim under the CIPAA. Again, the requisite statement is conspicuously absent. Be that as it may and upon my reading of the Payment Claim dated 26 December 2018 as a whole, I objectively discern that SWG has given Giatreka until 10 January 2019 to satisfy its alleged unpaid overdue payments, failing which SWG would initiate adjudication proceedings under the CIPAA against Giatreka. It is hence, in nature, a letter of demand prelude to an eventual payment claim under the CIPAA as contended by Giatreka. Otherwise, there would have been an immediate claim for the alleged overdue payment with the requisite statement explicitly expressed as a claim under the CIPAA instead of a threat to initiate adjudication proceedings under the CIPAA if the alleged overdue payments had not been received by a future targeted date. [34] The absence of these material requisite contents of the Payment Claim is fatal to the Decision. … … [36] In my opinion, albeit the CIPAA is permissive on the right of party representation whether by advocates and solicitors, claims consultants or even the disputant party itself, the prescribed requirements of the statute, particularly those pursuant to ss 5(2), 6(2), 9(1), 10(1) and 11(1) of the CIPAA, must however be strictly met. There should be no relaxation based on the quality of the representation. I have also noticed that the Asian International Arbitration Centre, being the Adjudication Authority under the CIPAA has, towards this end, published A Practical Guide to Statutory Adjudication in Malaysia which contains specimen forms especially to assist lay self-represented disputants in the conduct of CIPAA adjudication proceedings. If the lay disputant is not competent to handle these prescribed requirements, then it is best to seek professional representation. The non-compliance of the prescribed requirements cannot be excused for laxity on the part of the disputant party. … [40] By reason of my finding in paragraph [34] above, I nonetheless find and hold that Giatreka has successfully demonstrated that the Adjudicator had acted in excess of his jurisdiction and the Decision is hence liable to be set aside pursuant to s. 15(d) of the CIPAA.” (emphasis added).

As explained in the above paragraph 22, s 5(2)(b) CIPAA has been complied with because Sunshine’s Cause of Action (IC nos. 17 to 23) has been disclosed in Sunshine’s PC. I am also satisfied that the contents of Sunshine’s PC have complied with s 5(2)(a), (c) and (d) CIPAA. Consequently, Sunshine’s Breach (Section 5) has not been committed in this case. Giatreka, at [33], can be easily distinguished from this case because the PC in Giatreka was akin to a demand for payment and did not disclose a Contractual Cause of Action.

I shall now take the opportunity to discuss the following question - assuming Sunshine’s Breach (Section 5) has been committed in this case, does Sunshine’s Breach (Section 5) oust the Adjudicator’s Jurisdiction? My answer is as follows:

if Sunshine had no cause of action to claim from Marvelane for the Outstanding Certified Sum (IC nos. 17 to 23) (1st Scenario), Sunshine’s PC was a nullity and the court should set the AD solely on the ground that the Adjudicator had no jurisdiction under CIPAA to adjudicate Sunshine’s PC - please refer to the above paragraph

In the 1st Scenario, the court does not set aside the AD due to a breach of s 5(2)(b) CIPAA; and

as explained in the above paragraph 22, Sunshine’s Cause of Action (IC nos. 17 to 23) had accrued in this case (2nd Scenario). In the 2nd Scenario, even if it is assumed that the contents of Sunshine’s PC had failed to comply with any one or more of the paragraphs in s 5(2)(a), (c) and (d) CIPAA {Sunshine’s Breach [Section 5(2)(a), (c) and/or (d)]} -

the court cannot set aside the AD due to Sunshine’s Breach [Section 5(2)(a), (c) and/or (d)]. This is because the Adjudicator already had jurisdiction under CIPAA to adjudicate Sunshine’s PC under s 27(1) CIPAA - please see the above paragraph 23; and

by virtue of s 26(1) CIPAA, Sunshine’s Breach [Section 5(2)(a),

and/or (d)] -

shall be treated as an irregularity;

(ii) shall not invalidate the Adjudicator’s power to adjudicate the dispute between Sunshine and Marvelane;

(iii) shall not nullify the AP; and

(iv) shall not nullify the AD. I reproduce below s 26 CIPAA - “s 26. Power of adjudicator not affected by non-compliance

Subject to subsection (2), the non-compliance by the parties with the provisions of this Act whether in respect of time limit, form or content or in any other respect shall be treated as an irregularity and shall not invalidate the power of the adjudicator to adjudicate the dispute nor nullify the adjudication proceedings or adjudication decision.

The adjudicator may on the ground that there has been non-compliance in respect of the adjudication proceedings or document produced in the adjudication proceedings -

set aside either wholly or partly the adjudication proceedings;

make any order dealing with the adjudication proceedings as the adjudicator deems fit; or

allow amendment to be made to the document produced in the adjudication proceedings.” (emphasis added); and As explained above, Sunshine’s Breach [Section 5(2)(a), (c) and/or (d)] does not concern the Adjudicator’s Jurisdiction and cannot therefore oust the Adjudicator’s Jurisdiction.

I acknowledge that my view as expressed in the above paragraphs 21 and 28, is not consonant with Giatreka, at [26], [32] to [34], [36] and [40]. This is purely my misfortune. Firstly, I acknowledge that s 5(2) CIPAA has used the mandatory term “shall”. However, the word “shall” has also been employed by Parliament in s 26(1) CIPAA. It is noted that learned counsel in Giatreka did not draw the court’s attention in that case to s 26(1) CIPAA. Except for a breach of s 5(2)(b) CIPAA (when a PC does not disclose a Contractual Cause of Action), breaches of s 5(2)(a), (c) and/or (d) CIPAA, in my opinion, may be technical and if the respondent has filed a PR and AR, the respondent is not prejudiced in any manner by any breach of s 5(2)(a), (c) and/or (d) CIPAA by the claimant’s PC. In such a case, any breach of s 5(2)(a), (c) and/or (d) CIPAA by the claimant should be cured pursuant to s 26(1) CIPAA. Such an approach attains the Object (CIPAA) and ensures that adjudication proceedings should be simple, expeditious and economical - please refer to Integral Acres.

Whether Adjudicator had exceeded her jurisdiction In the above paragraphs 22 and 23, I have explained that the Adjudicator had jurisdiction under CIPAA to adjudicate Sunshine’s PC because Sunshine’s PC had disclosed Sunshine’s Cause of Action (IC nos. 17 to 23). I have also decided that there was no Sunshine’s Breach [Section 5(2)(a), (c) and/or (d)] - please refer to the above paragraph 27. Accordingly, I cannot accept the contention by Marvelane’s learned counsel that the Adjudicator has exceeded her jurisdiction within the meaning of s 15(d) CIPAA.

Even if it is assumed that Sunshine’s Breach [Section 5(2)(a), (c) and/or

(d)] has been committed in this case, I am of the view that the Adjudicator has not exceeded her jurisdiction pursuant to s 15(d) CIPAA. This is because s 27(1) CIPAA has expressly conferred jurisdiction on the Adjudicator to adjudicate all matters referred to in, among others, Sunshine’s PC. I. Is Clause 25.4(d) void under s 35(1) CIPAA?

Sunshine’s learned counsel has contended that Clause 25.4(d) is void under s 35(1) CIPAA. Section 35 CIPAA provides as follows: Prohibition of conditional payment 35(1) Any conditional payment provision in a construction contract in relation to payment under the construction contract is void.

For the purposes of this section, it is a conditional payment provision when -

the obligation of one party to make payment is conditional upon that party having received payment from a third party; or

the obligation of one party to make payment is conditional upon the availability of funds or drawdown of financing facilities of that party.” (emphasis added).

It has been decided in Lion Pacific Sdn Bhd v Pestech Technology Sdn Bhd [2020] MLJU 2308, at [17] to [20], as follows: “[17] The first issue that arises regarding s 35 CIPAA is whether the effect of s 35(1) CIPAA is confined to the two circumstances stipulated in s 35(2)(a) and (b) CIPAA. [18] In the High Court case of UDA Holdings Bhd v Bisraya Construction Sdn Bhd & Anor and another case [2015] 11 MLJ 499, Mary Lim Thiam Suan J (as she then was) has expressed the view that the effect of s 35(1) CIPAA is limited by s 35(2)(a) and (b) CIPAA (1st View). The 1st View is explained in UDA Holdings, at [86], as follows: “[86] Next, is s

That section prohibits any conditional payment provisions in construction contracts. Such provisions are void. ‘Conditional payment’ has a limited meaning. Subsection 35(2) provides: …” (emphasis added). The main issue that arises in UDA Holdings, at [32], concerns whether CIPAA has prospective or retrospective effect. As such, the 1st View expressed in UDA Holdings is merely obiter. [19] The following cases have decided that the effect of s 35(1) CIPAA is not confined by s 35(2)(a) and (b) CIPAA (2nd View):

the judgments of Lee Swee Seng J (as he then was) in the following three cases -

Econpile (M) Sdn Bhd v IRDK Ventures Sdn Bhd & another case [2016] 5 CLJ 882, at [78] to [83];

BM City Realty & Construction Sdn Bhd v Merger Insight (M) Sdn Bhd [2016] 1 LNS 1096, at [34], [36] and [37]; and

Terminal Perintis Sdn Bhd v Tan Ngee Hong Construction Sdn Bhd [2017] MLJU 242, at [132] to [135]; and

in Ireka Engineering & Construction Sdn Bhd v TRI Pacific Engineering Sdn Bhd [2020] MLJU 548, at [19] to [21], I have followed the 2nd View as expounded by Lee Swee Seng J (as he then was). [20] I am in favour of the 2nd View for the following reasons:

there is nothing in s 35(1) CIPAA which limits its effect to the two circumstances specified in s 35(2)(a) and (b) CIPAA. On the contrary, Parliament has employed a wide term “any” in s 35(1) CIPAA. …

if I have accepted the 1st View, this will render redundant the wide term “any” in s 35(1) CIPAA. It is a canon of statutory interpretation that the legislature does not legislate in vain - please refer to the judgment of Augustine Paul FCJ in the Federal Court case of All Malaysia Estates Staff Union v Rajasegaran & Ors [2006] 5 AMR 585, at 600-601;

the opening words “For the purposes of this section” in s 35(2) CIPAA clearly show that Parliament is merely giving two instances of a “conditional payment provision” in s 35(2)(a) and

CIPAA. These two instances of a conditional payment provision in s 35(2)(a) and (b) CIPAA cannot limit the wide effect of the term “any” in s 35(1) CIPAA;

the adoption of the 2nd View is in harmony with an adjudicator’s wide power under s 12(1) read with s 25(n) CIPAA to “decide or declare on any matter notwithstanding no certificate has been issued in respect of the matter” [Adjudicator’s Section 25(n) Power]. … If I have accepted the 1st View and s 35(1) CIPAA does not invalidate a contractual provision which stipulates that payment for “construction work” (as defined in s 4 CIPAA) is conditional upon certification (“Pay-If-Certified” Provision), a “non-paying party” (as understood in s 4 CIPAA) can resist a lawful claim for payment for construction work merely on a “Pay-If-Certified” Provision. In such an event, the application of the 1st View will not be in harmony with s 12(1) read with s 25(n) CIPAA but instead will render nugatory the Adjudicator’s Section 25(n) Power; and

… The 1st View is contrary to the Object (CIPAA) because the 1st View allows a “non-paying party” (as understood in s 4 CIPAA) to circumvent CIPAA by inserting a conditional payment provision which is beyond s 35(2)(a) and (b) CIPAA, such as a “Pay-If-Certified” Provision. If s 35(1) CIPAA does not nullify a “Pay-If-Certified” Provision, an “unpaid party” within the meaning of s 4 CIPAA will be deprived of payment for construction work when there is no certification in question. In such an event, the Object (CIPAA) is clearly defeated.” (emphasis added).

I accept the submission by Sunshine’s learned counsel that Clause 25.4(d) is void under s 35(1) CIPAA. This is because Clause 25.4(d) has expressly imposed a condition that until the Works are completed under clause 25.4(a) COC, Marvelane “shall not be bound by any provision in the Contract to make any further payment to” Sunshine. Hence, Clause 25.4(d) constitutes a “conditional payment provision” within the meaning of s 35(1) CIPAA and is therefore rendered void pursuant to that statutory provision. Marvelane cannot rely on Clause 25.4(d) in these 3 OS.

Whether Adjudicator had breached 2nd Rule Marvelane’s learned counsel had invited this court to set aside the AD on the ground that the Adjudicator had breached the 2nd Rule when she decided that Sunshine did not wrongfully suspend the Works under Clause 30.7.

I am of the view that the Adjudicator has not breached the 2nd Rule in this case because -

the Adjudicator had afforded Marvelane its right to adduce evidence and the right to submit on all issues which arose in Sunshine’s PC and Marvelane’s PR - please refer to David Wong Dak Wah JCA’s (as he then was) judgment in the Court of Appeal case of ACFM Engineering & Construction Sdn Bhd v Esstar Vision Sdn Bhd & another appeal [2016] MLJU 1776, at [20]; and

the Adjudicator had considered and rejected Marvelane’s submission regarding the Alleged Sunshine’s Unlawful Suspension (Works). An adjudicator’s rejection of a party’s submission is not tantamount to a contravention of the 2nd Rule. K. Should AD be set aside due to breach of 2nd Rule?

Even if it is assumed in this case that the Adjudicator had breached the 2nd Rule regarding the Alleged Sunshine’s Unlawful Suspension (Works) [Breach (2nd Rule)], I will not exercise my discretion under ss 15(b) and 24(c) CIPAA to set aside the AD. This decision is based on the following reasons:

as explained by Harmindar Singh JCA (as he then was) in the Court of Appeal case of Guangxi Dev & Cap Sdn Bhd v Sycal Bhd and another appeal [2019] 1 CLJ 592, at [32], there was no “real possibility” that without the Breach (2nd Rule), the Adjudicator would have reached a different decision in this case; and

the Breach (2nd Rule) is neither “decisive” nor “material” to the AD so as to persuade this court to set aside the entire AD - please refer to the judgment of Mary Lim Thiam Suan J (as she then was) in the High Court in Ranhill E & C Sdn Bhd v Tioxide (M) Sdn Bhd [2015] 1 LNS 1435, at [82]. L.

Scope of court’s power under s 15 CIPAA I have decided as follows in Alpha Galaxy Sdn Bhd v Euro Destar (M) Sdn Bhd [2021] AMEJ 614, at [26]: “[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

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

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;

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).

According to Marvelane’s learned counsel, the Adjudicator has made the following errors and omission in the AD (Alleged Adjudicator’s

the Adjudicator did not give effect to Clauses 25.4(d), 26.6(a), (b) and 30.7;

the Adjudicator did not decide that the Alleged Sunshine’s Breaches (Contract) had been committed; and

the Adjudicator rejected Marvelane’s Claim/Set-Off.

Premised on Alpha Galaxy, I cannot set aside the AD pursuant to s 15 CIPAA based on the Alleged Adjudicator’s Errors/Omission. Furthermore, by virtue of s 13(c) CIPAA, the Alleged Adjudicator’s Errors/Omission can and should be remedied at the Arbitration.

Court’s decision in Setting Aside OS As explained in the above Parts G to L, I have no hesitation to dismiss the Setting Aside OS. N. Should court allow OS Stay?

I reproduce below s 16 CIPAA: “Stay of adjudication decision 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 PCA has decided that the court may exercise its discretion under s 16(1)(b) CIPAA to grant a stay of the enforcement of an adjudication decision pending the disposal of litigation or arbitration (whichever applicable) when -

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 execution of the adjudication decision [2nd Ground (View Esteem)].

Marvelane’s learned counsel has advanced the following three reasons in support of the Stay OS [Marvelane’s 3 Reasons (Stay OS)]:

the subject matter of the AD is being arbitrated by Marvelane and Sunshine in the Arbitration;

Sunshine has filed a counterclaim in the Arbitration; and

there are special circumstances in this case because if the Stay OS is refused, there will be an injustice to Marvelane.

As elaborated in the above Parts G to J, the Adjudicator had not made any error in the AD. As such, there is no room for this court to invoke the 1st Ground (View Esteem).

I am not persuaded by Marvelane’s 3 Reasons (Stay OS) that it is in the interest of justice [as provided in the 2nd Ground (View Esteem)] to stay the enforcement of the AD pending the determination of the Arbitration. The following reasons underpin this decision:

the AD is based on IC nos. 17 to 23 wherein Sunshine’s work in the Project (as certified in IC nos. 17 to 23) had been valued by the QS and certified by the Architect. Both the QS and Architect are independent professionals who had been appointed by Marvelane for the Project;

in view of Marvelane’s refusal to pay the Outstanding Sum (IC nos. 17 to 23), Sunshine has been deprived of cash flow. Hence, it is only just for the court to refuse the Stay OS; and

if -

there is no stay of enforcement of the AD;

the Total AD Sum is paid by Marvelane to Sunshine; and

the Arbitration is resolved in favour of Marvelane against Sunshine - there is no real risk or likelihood that Sunshine in unable to repay the Total AD Sum to Marvelane. This decision is supported by the following reasons -

Marvelane has not adduced any evidence in the Stay OS to show that Sunshine is commercially insolvent in the sense that Sunshine is unable to pay its debts when these debts fall due for payment. In other words, Sunshine is still an on-going business concern;

(ii) no winding up petition has been presented against Sunshine; and

(iii) no suit has been filed against Sunshine by its financiers, creditors, sub-contractors, suppliers, clients or employees for any debt due from Sunray to them.

It is clear in Kurniaan Maju Sdn Bhd v HAS Setiamurni Sdn Bhd [2020] 9 MLJ 103, at [14], that Marvelane bears the onus to persuade the court to exercise its discretion under s 16(1)(b) CIPAA to allow the Stay OS. Premised on all the evidence adduced by LLM in the Stay OS, I unhesitatingly decide that such a burden has not been discharged by Marvelane.

Enforcement OS Section 28(1) and (2) CIPAA state as follows: “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).

Mary Lim Thiam Suan JCA (as she then was) has decided in the Court of Appeal in Inai Kiara Sdn Bhd v Puteri Nusantara Sdn Bhd [2019] 2 CLJ 229, at [24] to [26], that the court may exercise its discretion to grant leave under s 28(1) and (2) CIPAA to enforce an adjudication decision if the following three conditions (3 Conditions) are met:

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

there is no prohibition on the court’s discretionary power to grant leave to enforce the adjudication decision.

It is clear that the 3 Conditions have been satisfied in this case. Accordingly, the Enforcement OS is allowed.

Conclusion Premised on the above evidence and reasons:

both the Setting Aside OS and Stay OS are dismissed;

the Enforcement OS is allowed; and

one set of costs for the 3 OS shall be paid by Marvelane to Sunshine. WONG KIAN KHEONG Judge High Court of Malaya Shah Alam, Selangor Darul Ehsan DATE: 17 MARCH 2022 Counsel for Sunshine: Ms. Tan Min Lee & Ms. Lee Hui Juan (Messrs Gan Partnership) Counsel for Marvelane: Mr. Nad Segaram (Messrs Shearn Delamore & Co)