Mayfair Ventures Sdn Bhd v Setiakon Builders Sdn Bhd (B-02(C)(A)-2185-12/2024)

R4: Appeal No: B-02(C)(A)-2178-12/2024 (“Appeal No. 2178”) arising from the High Court Originating Summon

(ii) R5: Appeal No: B-02(C)(A)-2185-12/2024 (“Appeal No. 2185”) arising from the High Court Originating Summon No: BA-24C-23-06 2023 (“OS 23”) [2] Appeal No. 2178 is the Appellant’s (Mayfair Ventures Sdn Bhd) appeal against the High Court’s decision dated 6/12/2024 to dismiss the Appellant’s Originating Summons dated 8/5/2024 (Enclosure 1) to set aside the Adjudication Decision dated 16/4/2024 pursuant to section 15 of the Construction Industry Payment and Adjudication Act 2012 (“CIPAA”). [3] The Appeal No. 2185 is the Appellant’s (Mayfair Ventures Sdn Bhd) appeal against the High Court’s decision dated 6/12/2024 to allow the Respondent’s (Setiakon Builders Sdn Bhd) Originating Summons dated 4/6/2024 (Enclosure No 1) to enforce the Adjudication Decision dated 16/4/2024 pursuant to section 28 of CIPAA. [4] At the High Court, the parties agreed via a Consent Order dated 28/11/2024 for both Originating Summons to be heard and decided together. [5] The learned Judicial Commissioner heard both applications together and prepared only one Grounds of Judgment for both applications. [6] For the sake of convenience, the parties will be referred to henceforth with the acronym of “Mayfair” and “Setiakon”. Background Facts [7] By way of a Letter of Award dated 16.6.2016 (“LOA”) which incorporated the Agreement of Condition of PAM Contract 2006 (With Quantities) (COC), Setiakon was appointed as the Main Contractor by Mayfair for a project known as "Fasa 1: 2 Block Pangsapuri Perkhidmatan 35 Tingkat Blok A1 186 Unit dan Block B1 186 Unit di atas Podium yang mengandungi Soho (62) Unit, Kedai Kemudahan Rekreasi dan Tempat Letak Kereta dan 1 Blok Tempat Letak Kereta 7 Tingkat dan Kemudahan; Fasa 2: 2 Blok Pangsapuri Perkhidmatan 35 Tingkat (di atas Podium 4) Tingkat Block A2 186 Unit dan Block B2 186 Unit (to be awarded at later stage) di atas Lot 212 dan Lot 213, Persiaran Tropicana, PJU 3, Mukim Damansara, Daerah Petaling, Selangor Darul Ehsan" (“the Project”), for a total contract sum of RM223,538,378.36. [8]

RM1,337,584.91 being the balance of the unpaid sum due under Certificate No. 44R dated 19.8.2020;

RM497,374.52 being the balance of the unpaid sum due under Certificate No. 46 dated 20.09.2021;

RM4,481,155.56 being the retention sum not released by Mayfair to Setiakon despite the Defect Liability Period expired on 31/7/2022, due and payable under the terms of the contract, the due date being 30 /8/ 2022, i.e, 30 days from the expiry of the Defect Liability Period; and

RM2,493,315.94 is the interest due to late payment for progress work due to Setiakon calculated till 10/11/2023, being the date of the Payment Claim issued by Setiakon to Mayfair at a rate of 7.6% amounting to RM2,493,315.94. [11] The total amount is RM8,809,403.93, being the unpaid certified outstanding sums, retention sum, and late payment interest. [12] A dispute arose the between parties in relation to the total amount claimed. [13] On 10 /11/2023 Setiakon issued a Payment Claim to Mayfair pursuant to section 5 of the CIPAA 2012 for the total amount of RM8,809,403.93. [14] Subsequently, Mayfair issued its Payment Response dated 23/11/2023 pursuant to section 6 of the CIPAA where Mayfair had disagreed with Setiakon's claims made via the Payment Claim and disputed that:

The gross amount of work certified by the Quantity Surveyor (QS) is for RM207,568,875.04 as stated in the signed final account;

(ii) The sum of RM5,449,608.44 is the 2nd moiety of the Retention Sum, which is to be released only after the issuance of the Certificate of Making Good Defect (CMGD) as per the QS's letter dated 20.9.2021. [15] Mayfair had neither raised any defence and/or objections against Setiakon's claim for Late Payment Interest for the Progress Work nor had it raised any set-off, back-charges, and/or counterclaim in its payment response against Setiakon. [16] Since no payment had come forth upon issuance of the Payment Claim, Setiakon commenced Adjudication Proceedings against Mayfair by issuing a Notice of Adjudication dated 29 /11/2023 for the non-payment of RM8,809,430.93 as set out in the Payment Claim dated 10.11.2023. Adjudication Proceedings [17] Upon conclusion of the adjudication proceedings, on 16/4/2024 the learned Adjudicator delivered her decision in favour of Setiakon and ordered as follows:

The adjudicated (sic) total of RM4,131,813.45 (including the Late Payment Interest of RM2,493,315.94);

Interest at 5% per annum on the outstanding sum of RM4,131,813.45 from 16/04/2024 until full settlement;

Costs of RM120,600.00 less the Advance Security Deposit of RM30,300.00 deposited by the Respondent with AIAC pursuant to section 18(1) of the CIPAA 2012; and

The amounts in paragraphs (a), (b) and (c) above are to be paid by the Respondent to the Claimant within fourteen

working days from the date hereof. [18] On 8/5/2024, the Appellant filed the OS 18 to set aside the said adjudication decision and to stay the execution of the said Adjudication Decision pending the disposal of the setting aside application. [19] On 4/6/2024, the Respondent filed the OS 23 to enforce the said Adjudication Decision. [20] On 6/12/2024, the High Court dismissed Mayfair's OS 18 to set aside the Adjudication Decision and allowed Setiakon's OS 23 to enforce the Adjudication Decision (OS 23). [21] Aggrieved with the High Court decisions, the Appellant appealed against the decisions and these came before this Court for determination. [22] The two (2) Originating Summons in the High Court were heard together. As such, to facilitate the determination of these Appeals, we think that it would be convenient to combine and decide these Appeals in a single judgment as they are inter-related. Adjudication Decision Dated 16th April 2024 [23] The learned adjudicator's reasons inter alia are as follows: “I shall proceed to determine each of the Claimant's claims in sequence. Claim 1: RM1,337,584.91 and RM497,374.52 being the unpaid balances due under Certificates No.44R and No.46 respectively. The Claimant is claiming for the unpaid balances under Certificate 44R issued on 19/08/2020 and Certificate 46 issued on 20/09/2021. The Respondent is not disputing the respective amounts of unpaid sums under the two Certificates. The Respondent argues that the said amounts form part of a Mutually Agreed Sum of RM3,800,000.00 which is to be withheld by agreement, and is undue to the Claimant under this adjudication claim. To this end I must first determine at the outset, if there is indeed an agreement between parties to withhold a Mutually Agreed Sum of RM3,800,000.00 comprising the following;

Balance of Certificate No.44R: RM1,337,584.91

Balance of Certificate No.46: RM497,374.52

Part of the Retention Sum: RM1,965,040.57 Total: RM3,800,000.00 The Respondent contends by mutual agreement, the sum totalling RM3,800,000.00 ("Mutually Agreed Sum"), was to be withheld, only be released to the Claimant upon the Claimant's rectification of the defective works, and the completion of the incomplete works (as defined by the Respondent in the Adjudication Response). In support of this contention, the Respondent has exhibited statutory declarations from its director and group managing director stating there was a mutual agreement reached to this effect at a meeting on 01/10/2022 by the parties. The Claimant denies that any agreement was reached pertaining to the Mutually Agreed Sum. A statutory declaration by the Claimant's contract director denying this agreement is exhibited to rebut the Respondent's contention. I have perused the emails and documents exhibited and I take cognisance of the letters between both parties on this issue. I note that the settlement agreement dated 05/01/2023 as exhibited by the Respondent was not executed by the Claimant. The Claimant in fact, executed a settlement agreement dated 14/03/2023 for Phase 2 of the Project as exhibited in exhibit 4 in the Claimant's bundle of documents in the Adjudication Reply ("BOD A Reply" exhibit 4). There is no cogent reason for the Claimant to accept the settlement for Phase 2 in writing, and not do so for Phase 1. I am convinced that the reason for the absence of a similar written agreement for Phase 1 is because the agreement for the retention of the Mutually Agreed Sum was unacceptable to the Claimant where Phase 1 was concerned. I am also in consensus with the Claimant that the previous adjudication claims were withdrawn as parties were trying to negotiate a settlement, and not because a settlement had been reached. I do not accept the Respondent's argument that the Claimant is estopped from denying the existence of the said mutual agreement between the parties as it never disputed the same. As evident from the exhibited documents, the Claimant in fact responded seeking amendments to the agreement for Phase 2, and went on to sign the Phase 2 agreement. Consequently, I find the Respondent's claim that there was an agreement to retain the Mutually Agreed Sum of RM3,800,000.00, devoid of merit. Having concluded thus, the unpaid balances of RM1,337,584.91 and RM497,374.52, the figures of which are not disputed, under Certificates No.44R and 46 respectively, are due to be paid by the Respondent within the respective periods of honouring certificates under the Contract. This being the case, I am allowing the Claimant's claim for the Balance on Certificate No.44R for RM1,337,584.91 and Balance from Certificate 46 for RM497,374.52. Claim 2: Balance Retention Sum of RM4,481,155.56. The total retention sum under the Contract as evidenced by Certificate 46 is RM5,449,608.44. The amount of the unpaid Balance Retention Sum of RM4,481,155.56 is not in dispute. [RM5,449,608.44-RM968,452.88 (monies due to the nominated sub-contractors). The Respondent argues that a sum of RM1,965,040.57 from Balance Retention Sum of RM4,481,155.56 formed part of the Mutually Agreed Sum. In Claim 1, I have determined that there was no agreement for the alleged Mutually Agreed Sum to be withheld. This being the case, the unpaid Balance Retention Sum remains as RM4,481,155.56. The Respondent argues that this sum cannot be released to the Claimant pursuant to the Contract as the CMGD has not been issued by the Architect as the Claimant has not completed the rectification of the Defective Works. The Claimant argues that it has completed all the Defective Works and what remains to be remedied, does not fall under the Final Defects List. I have considered all the documents and arguments submitted by both parties pertaining to this claim and read the corresponding clauses of the Contract. There are various correspondences and Architect's Instruction certificates ("Al") issued and exhibited pertaining to the alleged defects and remedial works. The Claimant states that all defects listed by the Architect have been remedied and thus the unpaid Balance Retention Sum of RM4,481,155.56 is due from the Respondent. … Defects at the common area were completed on 09/10/2023. The Unit defects were completed albeit some minor remedial works in December 2023. I accept that the Claimant could have accomplished all rectification works. However, from the evidence and photographs submitted, these defects were completely remedied only in December 2023. The Payment Claim is dated 10/11/2023. Consequently, I find that the Claimant's claim for the release of the unpaid Balance Retention Sum in this adjudication matter is premature, and I must dismiss this claim for RM4,481,155.56. (emphasis added) Claim 3 - Late Payment Interest of RM2,493,315.94 ("LPI”) Clause 30.17 of the Contract states that for payments made after the period of honouring certificates, a simple interest based on Maybank Base Lending Rate (BLR) plus 1% shall be payable by the defaulting party on such outstanding amount until the date of payment is made and accordingly, the interest rate applicable is 7.6%. As per the Contract, the payment term of 30 days begins from the dates the invoices were received by the Respondent. These are undisputed facts. The Respondent argues that a sum of RM196,461.92 was agreed to, and paid as the total LPI and thus, the Claimant is estopped from pursuing this claim. The Claimant argues that the sum of RM196,461.92 paid by the Respondent only represents the LPI for Certificate 37. I have perused the documentation and the evidential proof submitted by the Claimant. I agree that the RM196,461.92 paid was in relation to Certificate 37, as clearly stated in exhibit 13A The Claimant has submitted comprehensive documents evidencing the outstanding LPI. I disagree with the Respondent that the conditions stated in the extension of time ("EOT") letters exclude the claim for LPI. Had this been the case, the Respondent would not have paid LPI on Certificate 37. The Claimant is entitled to Late Payment Interest as provided for in the Contract. However, the sum of RM196,461.92 on Certificate 37 should be deducted from the RM2,493,315.94 claimed to avoid duplicity. I am allowing the claim for Late Interest Payment for RM2,296,854.02. (emphasis added) I shall proceed to consider the Respondent's set-offs. At the outset, I wish to emphasize that it has been long settled by the courts that the Respondent is entitled to raise a set-off in the Adjudication Response, even if the same was not included in the Payment Response. Set-off 1: Works Not Done The Architect had via their Architect's Instruction ("Al") dated 06/09/2023 informed the Claimant that a sum of RM387,741.71 shall be set off under Clause 30.4 as the works listed were not carried out by the Claimant. The Respondent alleges fraud and dishonesty. However, there is no significant proof or evidence submitted to substantiate these claims by the Respondent. This set-off was initiated by the Respondent as stated in Al 237 dated 04/09/2023. The Quantity Surveyor, only at the request of the Architect, issued a letter dated 12/09/2023. Aside from the Al and letter, there is no proof of the omitted works. Neither is there any proof of fraud or concealment. The Final Account was closed off years earlier and nothing was amiss. I cannot accept the Respondent's allegations of fraud without any proof. I am inclined to accept the Claimant's explanation in the Adjudication Reply pertaining to the works listed in items (i) to (iv). The set-off is unsustainable for lack of evidential proof, and accordingly, I disallow the same. (emphasis added) Set-Off 2: Toilet Usage at Level LG / Level G, Improper Usage-RM1,056,000.00 The Claimant provided an undertaking to the Respondent that their workers shall not use the toilets located at Level LG and Level G of the Project. In the event of any breach, the Claimant was to pay the Respondent a sum of RM500.00 per person per usage. The Respondent claims a sum of RM4,000.00 per day from 07/04/2023 until the Claimant vacates the Demised Premises for non-compliance of the terms and conditions of the Rental Agreement. Once again, there are no evidential proof or records submitted by the Respondent justifying this set-off. The Respondent merely states an estimate. The Claimant alleges there were other renovation contractors using the toilets. There are no recorded incidences of the breach. The Respondent has capriciously claimed a sum of monies to be set-off. Aside from the Respondent's allegation, there is no other evidential proof to justify this set-off. Accordingly. I must dismiss this set-off.

RM1,337,584.91 and RM497,374.52 being the unpaid balances due under Certificates No.44R and No.46 respectively;

(ii) Late Payment Interest for Progress Work payments in the sum of RM2,296,854.02. The Claimant's claim is allowed in total for RM4,131,813.45. I have considered the arguments by both parties relating to costs and have decided to award costs as specified under the Costs heading. DETERMINATION The Claimant's claim is allowed as follows:

The adjudicated total for RM4,131,813.45;

Interest at 5% per annum on the outstanding sum of RM4,131,813.45 from 16/04/2024 until full settlement;

Costs of RM120,600.00 less the Advance Security Deposit of RM30,300.00 deposited by the Respondent with AIAC pursuant to Section 18(1) of the CIPAA 2012; and

The amounts in paragraphs (a), (b) and (c) above are to be paid by the Respondent to the Claimant within fourteen (14) working days from the date hereof.” High Court’s Decision [24] The High Court’s analysis of the facts and the applicable law and the reasons for affirming the learned adjudicator's decision may be gleaned from the following parts of the Grounds of Judgment which read as follows: “D. ISSUES [18] Mayfair's application to set aside the AD pursuant to Sections 15(b) and (d) of the CIPAA 2012 is on the following reasons:

18.1 Section 15(b) of the CIPAA 2012

The Learned Adjudicator had breached the principle of natural justice when she had failed to consider Mayfair's defence in its Adjudication Response that the works at Level LG of the Project was not completed till to date and as such, Setiakon has no right to claim for the payments under Certificate

(ii) The Learned Adjudicator had failed to consider the fact that there were extensions of time given 5 times to Setiakon by Mayfair with no conditions imposed on the basis that there will not be any claim for interest; and

(iii) The Learned Adjudicator had failed to consider the fact that the interest rate imposed cannot be the same on all the certificates as the certificates were all issued at different times and as such different rates would be applicable.

18.2 Section 15(d) of the CIPAA 2012

The Learned Adjudicator had acted in excess of jurisdiction on the followings:

as Setiakon has made claims for Late Payment Interest on the Progress Certificate Nos. 44R and 46 but also on Progress Certificates which were already paid by Mayfair, in particular,

The Adjudicator had imposed interest on interest; and

There is no cause of action stated in the Payment Claim as the due date given for the Late Payment Interest claim is the date of the Payment Claim i.e 10.11.2023. … [20] Setiakon's application to enforce the AD pursuant to Section 28 of the CIPAA 2012 is premised on the following;

That the Adjudicated Amount is not paid by Mayfair; and

(ii) that the AD is neither set aside nor stayed. E. FINDINGS OF THE COURT Setting Aside OS-Suit 18 (Sections 15(b) and (d) of the CIPAA 2012) [21] The issues which Mayfair has raised against the AD are particularly pursuant to Sections 15(b) and (d) of the CIPAA

As such, this court will consider whether Mayfair has discharged its burden on a balance of probabilities to prove to this court that there has been a denial of natural justice by the Adjudicator and or that the Adjudicator had acted in excess of her jurisdiction.

Section 15(b) of the CIPAA 2012. [22] In this case, Mayfair contends that the Adjudicator had breached the rules of natural justice when she did not consider its defences:

Setiakon is not entitled to claim for PC no.44R and 46;

(ii) that since EOT was given, Setiakon should not be entitled to impose late payment interest on Mayfair; and

(iii) that the interest rate granted is inapplicable as the time and rates vary. … [25] There is no allegation made against the Learned Adjudicator that she had failed to accord procedural fairness to both parties at the Adjudication Proceedings. It is Mayfair's contention that the Learned Adjudicator had failed to consider its defences as stated in its grounds of application, however, upon perusing through the AD, the Learned Adjudicator had deliberated on all the issues raised by Mayfair in opposing the Adjudication in her findings and reasons under all the sub-headings. [26] In deliberating on Setiakon's claim under the heading of Late Payment Interest for the sum of RM2,493,315.94, the Adjudicator had found that there was a sum of RM196,461.92 which Mayfair had paid as Late Payment Interest for Certificate No. 37 and as such, in her decision she had awarded a sum of RM2,296,854.02 after deducting the already paid sum of RM196,461.92. [27] The Adjudicator had not only considered both parties' arguments but had also made her findings in accordance to all the documents in relation to these issues which had been submitted for the purpose of the Adjudication Proceedings. … [29] Even if the Adjudicator had answered all the right questions wrongly, it is not for this court to examine the merits of the Adjudicator's findings and interfere in her decision. Whether the decision of the Adjudicator is acceptable or not to the parties, it cannot form the basis of an application to set aside the same. … [31] Therefore, Mayfair's allegation that the Adjudicator had failed to consider the issues raised by it at the Adjudication Proceedings and as such had breached the principles of natural justice is totally unsubstantiated and unfounded. As such, Mayfair has failed to establish Section 15(b) of the CIPAA 2012.

Section 15(d) of the CIPAA 2012 [32] Section 27 of the CIPAA 2012 provides the jurisdiction in which the Adjudicator can conduct the Adjudication Proceedings. Section 27(3) of the CIPAA particularly gives the Adjudicator the discretion to proceed and complete the adjudication proceedings not withstanding any jurisdiction challenge, without prejudice to the rights under Section 15 and Section 28 of the CIPAA 2012 accordingly. [33] An AD is commonly applied to be set aside in reliance of Section 15(d) of the CIPAA 2012, as such the case of Terminal Perintis Sdn. Bhd. v Tan Ngee Hong Construction Sdn. Bhd. and another [2017] 1 LNS 177; [2017] MLJU had laid down the classification in terms of 'jurisdiction'. Lee Swee Seng J (as he then was) classified ‘jurisdiction' in 3 categories i.e. core jurisdiction, competence jurisdiction and contingent jurisdiction. [34] In this case, Mayfair is challenging the Learned Adjudicator's core jurisdiction in deciding on the Late Payment Interest claimed by Setiakon as categorised in the Terminal Perintis Sdn. Bhd. v Tan Ngee Hong Construction Sdn. Bhd. and another (supra). [35] It is Mayfair's contention that the Adjudicator had acted in excess of jurisdiction as Setiakon has made claims for Late Payment Interest on the progress certificates which were already paid by Mayfair, in particular, PC nos. 1- 46 (excluding PC no. 44R and PC no. 46). It is also Mayfair's allegation that the amount claimed for Late Payment Interest is not within the definition of "Payment" pursuant to Section 4 of the CIPAA

[36] Mayfair's contention that the Adjudication has acted in excess of her core jurisdiction only because she had decided on Setiakon's claim for Late Payment Interest is unfounded as this interest claimed was arising from a payment for work done or service rendered in a construction contract and not one that stands on its own. [37] Mayfair did not deny on the accrual of the Late Payment Interest but only that Setiakon is not entitled to claim for the same via the Adjudication Proceedings since the principle amount had been paid by Mayfair for PC nos.1-46, for which the Adjudicator has no jurisdiction. As stated by Setiakon in its Payment Claim, pursuant to Clause 30.17 of the COC, Setiakon is entitled to a simple interest based on Maybank Base Lending Rate (BLR) plus 1% payable by Mayfair on default of making payments within the given due date to make the payments. [38] Since there is no denial of delay in making the certified payments to Setiakon and resulting from that delay, interest had accrued by virtue of the COC and had become payable, it is my view that the Late Payment Interest claimed by Setiakon is "payment" as defined in the CIPAA 2012. Paying only the principal amount and not the accrued interest would tantamount to non-payment for work done or service rendered under the construction contract by Mayfair. [39] The fact remains that Setiakon had made its claim for Late Payment Interest in its Payment Claim and undisputedly Mayfair neither denied the claim nor raise any jurisdictional objection to Setiakon's claim in its Payment Response or in its Adjudication Response. [40] Additionally, pursuant to section 25(o) of the CIPAA 2012, the Adjudicator has the power to decide on interest. … [42] Since the claim for Late Payment Interest was made in the Payment Claim, pursuant to section 27(1) of the CIPAA 2012 the adjudicator has the jurisdiction to address and decide on the same. [43] Undeniably, the claim for Late Payment Interest was made by Setiakon in its Payment Claim pursuant to sections 5(1) and

of the CIPAA 2012 for which Mayfair did not raise any dispute to this particular claim in its Payment Response.

(iii) Enforcement OS - Suit 23 (Section 28 of the CIPAA 2012) [53] As guided by Her Ladyship Mary Lim Thiam Suan JCA (as she then was) in the Court of Appeal case of Inai Kiara Sdn Bhd v. Puteri Nusantara Sdn Bhd [2019] 2 CLJ 229, the court may exercise its discretion to grant leave under Section 28(1) and (2) of the CIPAA 2012 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. [54] In this case, in the absence of any evidences to say otherwise, all 3 conditions have been satisfied and since the setting aside application of the AD and stay of execution of the AD have been dismissed, Setiakon's application to enforce the AD is allowed with costs of RM5,000.00 to be paid by Mayfair subject to allocatur fee. F. CONCLUSION [55] Premised on the above evidences and reasons:

the Setting Aside OS is dismissed;

(ii) …

(iii) the Enforcement OS is allowed; and

(iv) a total cost of RM10,000.00 subject to allocatur fee shall be paid to Setiakon by Mayfair accordingly.” Our Decision Setting Aside Originating Summons in Appeal No. 2178 [25] In determining the present appeal before us, the main and critical issue here is the jurisdiction of an adjudicator as provided under the CIPAA. Statutory provisions under the CIPAA have provided, among others, the following:

Section 27 of CIPAA, provides that: Jurisdiction of adjudicator. “(1) Subject to subsection (2), the adjudicator's jurisdiction in relation to any dispute is limited to the matter referred to adjudication by the parties pursuant to sections 5 and 6.

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

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

(ii) Section 5 of CIPAA 2012 provides that: Payment claim “5.(1) An unpaid party may serve a payment claim on a non-paying party for payment pursuant to a construction contract.

The payment claim shall be in writing and shall include—

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

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

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

a statement that it is made under this Act. (emphasis added)

(iii) Payment response

6.(1) A non-paying party who admits to the payment claim served on him shall serve a payment response on the unpaid party together with the whole amount claimed or any amount as admitted by him.

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

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

A non-paying party who fails to respond to a payment claim in the manner provided under this section is deemed to have disputed the entire payment claim.”

(iv) Section 4 of CIPAA 2012 defines “payment" as: "payment" means a payment for work done or services rendered under the express terms of a construction contract." (emphasis added) [26] The wording of section 27 of the CIPAA is plain and unambiguous, where it expressly limits the jurisdiction of an adjudicator to adjudicate matters referred to the adjudicator under sections 5 and 6 of the same Act. This has been acknowledged by the Federal Court in View Esteem Son Bhd v. Bina Pure Holdings Bhd (2019) 5 CLJ 479: [2018| 2 MLJ 22 where Zulkefli PCA (as he then was) said this: “[54] The principle that jurisdiction is about subject-matter applies to every statute. Thus, CIPAA applies only to "construction contracts" as defined under the Act (see ss. 2, 3 & 4) and that the "payment dispute" must arise under a construction contract. These are fundamental jurisdictional premises for CIPAA to apply. Sections 5 and 6 of CIPAA relate to this. Section 5 of CIPAA speaks of a "payment pursuant to a construction contract". By s. 4 of CIPAA, "payment" is defined as "payment for work done... under the express terms of a construction contract". The response under s. 6 of CIPAA has to be in relation to the "payment" claim under ss. 4 and 5 of CIPAA as to whether it is admitted or disputed. [55] By s. 27(1) of CIPAA, the arbitrator's jurisdiction "is limited to the matter referred to adjudication" pursuant to ss. 5 and 6 of CIPAA. It refers to the "identification of the cause of action" in relation to the construction contract as required under s. 5(2)(b) of CIPAA. In turn, the payment response under s. 6 of CIPAA is defined and limited by the claim under s. 5 of CIPAA. [56] In short, s. 27(1) of CIPAA refers to the subject matter of the claim under s. 5 of CIPAA, which is the "cause of action" identified by the claimant by reference to the applicable clause of the construction contract. Thus, if the payment claim relates to Progress Claim No. 28 (as in the present case) the jurisdiction of the adjudicator is limited to this progress claim and nothing else. The payment response is likewise limited to an answer to Progress Claim No. 28. [57] It can thus be said that the appellant's case regarding the jurisdiction referred to in s. 27(1) of CIPAA, is the subject matter of the claim and the cause of action as that identified under the relevant provision of the construction contract. By s. 27(2) of CIPAA, the parties may by consent extend the jurisdiction of the adjudicator to cover other matters. A typical example will be that of other progress claims falling due before the adjudication commences. Section 27(1) of CIPAA has nothing to do with the grounds of the claim or the reasons for opposing the claim.” Main Issue [27] Having considered the law, we now revert to the present case. This appeal hinges on one main issue for this court’s determination, which is: Whether the learned adjudicator had acted in excess of her jurisdiction by allowing the late payment interest per se claimed by Setiakon for an amount of RM2,296,854.02 based on Certificates No. 1 to No. 46 which had already been paid by Mayfair. (emphasis added) [28] Suppose the answer posed in this Appeal is in the affirmative, the matter will end there because, without “jurisdiction" to adjudicate claims for interest alone, the adjudicator would have no "power" to award any interest. [29] The terms "jurisdiction" and "power" of the court have been explained in Lee Cheng v. Seow Peng Kwang [1959] 1 LNS 107; [1960] 1 MLJ 1, at 3, by Thomson CJ (as he then was) in the Federation of Malaya's Court of Appeal as follows: "It is axiomatic that when different words are used in a statute they refer to different things and this is particularly so where the different words are, as here, used repeatedly. This leads to the view that in the [Courts Ordinance 1948] there is a distinction between the jurisdiction of a Court and its powers, and this suggests that the word "jurisdiction" is used to denote the types of subject matter which the Court may deal with and in relation to which it may exercise its powers. It cannot exercise its powers in matters over which, by reason of their nature or by reason of extra-territoriality, it has no jurisdiction. On the other hand, in dealing with matters over which it has jurisdiction, it cannot exceed its powers." (emphasis added). [30] The significance of the divide between 'jurisdiction' and 'powers' lies in the fact that 'jurisdiction' relates to the types of subject matter which the court may deal with' whereas its powers may be exercised only in relation to that jurisdiction. [31] By section 27(1) of the CIPAA, the arbitrator's jurisdiction 'is limited to the matter referred to adjudication' pursuant to sections 5 and 6 of the CIPAA. [32] In contrast to jurisdiction, the 'powers' of the adjudicator are listed in sections 25 and 26 of the CIPAA under the specific heading of 'Powers of the Adjudicator'. It follows that an adjudicator may exercise all or any of the powers under sections 25 and 26 of the CIPAA so long as he keeps within his jurisdiction in adjudicating only the subject matter referred to him pursuant to sections 5 and 6 of the CIPAA 2012. [33] It is equally pertinent to emphasize that the Appeals herein have nothing to do with the power of the adjudicator to award financing costs and interest under section 25(o) of CIPAA. The power of the adjudicator under the said section to award interest is a “consequential power” tied to an unpaid amount for work done. It does not extend to adjudicating claims solely for interest or financial losses not related to work done. [34] In this regard, the Court of Appeal in Milsonland Development Sdn Bhd v. Macro Resources Sdn Bhd and Another Appeal [2018] CLJU 2078 through the judgment delivered by David Wong Dak Wah JCA (as he then was) held as follows: “AWARDING OF INTEREST ON THE SUM OF RM3,229,733.30 [24] On this issue, we found no difficulty in agreeing with the learned Judge's view that the learned adjudicator was fully entitled to award interest. The rationale is a simple one. The power to award interest is attached to the power to award the claim in that it is a consequential power. Such principle is premised on the concept of fairness as in all monetary claim, the winning party had been wrongly kept away from the use of the money claimed and it ought to be compensated for it. Not to be compensated, the winning party would be deprived of full justice. Incomplete justice in the circumstance before us would simply be grossly unfair and encourages recalcitrant paymaster to remain delinquent.” (emphasis added) [35] Setiakon also alleged that the claim for Late Payment Interest in the adjudication proceeding is pursuant to Clause 30.17 of the PAM Contract, which provides that: “If the Employer fails to pay the Contractor the amount due on any certificate (less any Liquidated Damages and set-off which the Employer is expressly entitled to make under the Contract) after the Period of Honouring Certificates, or the Contractor owes a debt or fails to pay any sum due and owing to the Employer within twenty-one (21) Days after receipt of written notification by the Employer of such debt or amount owing, a simple interest based on the Maybank Base Lending Rate plus one (1) percent shall be payable by the defaulting party on such outstanding sum until the date payment is made.” (emphasis added) [36] On this point, we agreed with learned counsel for Mayfair in saying that the first limb of the Clause 30.17 of the PAM Contract that the late payment interest only arises if the employer fails to pay the certified amount within the Period of Honouring Certificate arising out of the breach of contract. Unfortunately, the learned judicial commissioner has not properly considered that the claim of payment interest pursuant to the said clause is only a claim for damages and not payment for work done or services rendered under the construction contract. As such, the adjudicator has no core jurisdiction to adjudicate and to award the claim to Setiakon. Burden of Proof [37] The burden lies with Mayfair to establish its case for a Setting Aside of the Adjudication Decision under section 15 of CIPAA. Section 15 of CIPAA 2012 provides that:

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 adjudication decision was improperly procured through fraud or bribery;

there has been a denial of natural justice;

the adjudicator has not acted independently or impartially; or

the adjudicator has acted in excess of his jurisdiction. (emphasis added) [38] In Hilform (M) Sdn bhd v. Tsr Bina Sdn Bhd and another summons [2020] MLJU 808, Aliza Sulaiman J held as follows: “[15] The burden thus lies on TSR to establish its case for setting aside the Adjudication Decision on either or both of the grounds that if has chosen and as expressly provided in s 15 CIPAA, In this pursuit. TSR has narrowed down four instances where the manner in which the findings were made by the learned Adjudicator has purportedly breached natural justice and or exceeded her jurisdiction.” Nature of court's power under section 15 of CIPAA 2012 [39] The nature of the court's power under section 15 of CIPAA has been explained in Alpha Galaxy Sdn Bhd v. Euro Destar (M) Sdn Bhd [2021] AMEJ 614, at [26], as follows: "[26] This case serves as a reminder of the nature of the court's power in deciding an application under s. 15 CIPAA (Setting Aside Application). I am of the following view regarding a Setting

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, erroneously admitted;

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. [3] 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 las provided in s. 13(c) CIPAA) - Econpile, at [67]." (emphasis added). [40] We will now address the jurisdictional issue in detail.

Jurisdictional Issue [41] Setiakon argued that Mayfair never raised any jurisdiction challenge to the late payment interest when it was included in Setiakon Payment Claim and Adjudication Claim, and as such, it is a “pleaded matter” that falls within the jurisdiction of the learned adjudicator and hence was entitled to determine this claim. It was only during the Setting Aside Application that Mayfair’s suddenly raise the issue that the learned adjudicator had acted outside of her jurisdiction in allowing the late payment interest claim. [42] On the other hand, the learned counsel for Mayfair argued that a lack of jurisdiction can be raised at any stage and Mayfair cannot be estopped from challenging the jurisdiction in the Setting Aside Application. [43] We agree with the contention of Mayfair. It is well-established that the equitable estoppel doctrine cannot be invoked to confer jurisdiction on an adjudicator to adjudicate a matter when the adjudicator has no such core jurisdiction under CIPAA even though the same was not raised in the adjudication proceeding. [44] We refer to the case of View Esteem Sdn Bhd v. Bina Puri Holdings Bhd [2018] 2 MLJ 22, where the Federal Court through the judgment delivered by Zulkefli PCA (as he then was) held as follows: “[18] We are in agreement with the contention of the appellant that the error in the judgment of the Court of Appeal is the failure to recognise that the jurisdictional complaint in the present case is that the CIPAA did not apply at all because of s 41, and not an ‘excess of jurisdiction’ under s 15, on the basis that CIPAA applied. It is what is termed as an absolute lack of jurisdiction that may be taken up at any time. On this point, the Singapore High Court case of Chip Hup Hup Kee Construction Pte Ltd v Ssangyong Engineering & Construction Co Ltd [2010] 1 SLR 658 had this to say: Thus, it seemed that when what was being alleged was an absolute lack of jurisdiction on the part of a particular tribunal or court to hear a particular dispute, ‘jurisdiction’ being used in the strict sense of capacity to hear, then if the tribunal concerned does not have such jurisdiction, any party to the dispute may assert the lack of jurisdiction at any stage and can never be held to be estopped from doing so or to have waived its right of protest. On the contrary, when it is a question of irregularity of procedure or contingent jurisdiction or non-compliance with a statutory condition precedent to the validity of a step in the litigation, such irregularity or non-compliance can be waived because the effect of the waiver would not be to create or confer any jurisdiction that did not previously exist.” (Emphasis added)

Late Payment Interest [46] Setiakon further argued that the late payment interest was expressly pleaded for and claimed by the Setiakon in the Payment Claim. Setiakon’s never limited its claim to only Certificate No.44R and Certificate No.46. [47] Setiakon states that its claim for late payment interest (for all Certificates No.1 to No.46) was expressly pleaded in Setiakon's Payment Claim dated 10.11.2023 and the Notice of Adjudication dated 29.11.2023. Therefore, it is inaccurate for Mayfair to suggest that Setiakon's Payment Claim against Mayfair is only for the balance unpaid sum under Certificates No.44R and 46. [48] As late payment interest is one of the pleaded heads of claim in Setiakon's Payment Claim, it confers jurisdiction on the learned adjudicator and she cannot be prevented from deciding Setiakon's late payment interest claim. [49] More so when the payment interest has been expressly provided under Clause 30.17 of the PAM Contract based on Maybank Base Lending Rate (BLR) plus 1% on outstanding amounts until the date of payment is made. It is a payment that has been agreed between the parties in respect of work done under the PAM Contract. In addition to the above clause, the learned adjudicator also has the discretion to exercise the power to award financing costs and interest under section 25(o) of CIPAA. [50] Therefore, it is not a claim for 'loss and expense', or for general damages, or for extra-contractual claims, as alleged by Mayfair. It is a claim for payment for work done as the Contract expressly allows for the contractor to claim for such late payment interest (which is interest on the certified sums - work done). [51] Hence, it was argued that the learned adjudicator had acted within the jurisdiction accorded to her to decide on the matters raised in the Payment Claim pursuant to section 27 of the CIPAA 2012 including the claim for late payment interest. It is not for this Court to interfere on the merits of the adjudicator’s findings in arriving at her decision. [52] On the other hand, the learned counsel for Mayfair contended that the learned adjudicator had acted in excess of her jurisdiction in allowing Setiakon’s claim for late payment interest based on Certificates 1 to 46 as most of the principal amount had already been paid by Mayfair before the Payment Claim was issued and the late payment interest was not based on the remaining amount outstanding for work done. [53] Thus, the late payment interest claims amounting to RM2,296,854.02 calculated from the due date of each Interim Payment Certificate up to 10.11.2023, i.e. the date of the Payment Claim, do not fall within the definition of ‘payment’ under CIPAA. The learned adjudicator is only entitled to grant late payment interest for Certificates No. 44R and 46, i.e. the principal claim in the adjudication proceedings. [54] At this stage, it bears mentioning again that the present setting aside application in OS 18 pursuant to Section 15 of CIPAA 2012 is not meant to dispute regarding the merits of the Adjudication Decision for those that had been the subject matter of the adjudication proceedings which is reserved for the proper forum i.e., arbitration, in line with section 13(c) of the said Act. [55] Much had been strenuously canvassed before us by the learned counsel for both sides on this important point concerning the late payment interest. The question that arises in our instant Appeal is whether the claim for a stand-alone late payment interest is a “payment for work done or services rendered under a construction contract” as defined in section 4 of CIPAA 2012. [56] In this case, the learned judicial commissioner in paragraph [36- 39] & [43] of the Grounds of Judgment concluded as follows: “[36] Appellant’s contention that the Adjudication has acted in excess of her core jurisdiction only because she had decided on Respondent’s claim for Late Payment Interest is unfounded as this interest claimed was arising from a payment for work done or service rendered in a construction contract and not one that stands on its own. [37] Mayfair did not deny on the accrual of the Late Payment Interest but only that Setiakon is not entitled to claim for the same via the Adjudication Proceedings since the principle amount had been paid by Mayfair for PC nos. 1 - 46, for which the Adjudicator has no jurisdiction. As stated by Setiakon in its Payment Claim, pursuant to Clause 30.17 of the COC, Setiakon is entitled to a simple interest based on Maybank Base Lending Rate (BLR) plus 1% payable by Mayfair on default of making payments within the given due date to make the payments. [38] Since there is no denial of delay in making the certified payments to Setiakon and resulting from that delay, interest had accrued by virtue of the COC and had become payable, it is my view that the Late Payment Interest claimed by Setiakon is "payment" as defined in the CIPAA 2012. Paying only the principal amount and not the accrued interest would tantamount to non-payment for work done or service rendered under the construction contract by Mayfair. [39] The fact remains that Respondent had made its claim for Late Payment Interest in its Payment Claim and undisputedly Appellant neither denied the claim nor raise any jurisdictional objection to Respondent's claim in its Payment Response or in its Adjudication Response. ... [43] Undeniably, the claim for Late Payment Interest was made by Respondent in its Payment Claim pursuant to Sections 5(1) and (2) of the CIPAA 2012 for which Appellant did not raise any dispute to this particular claim in its Payment Response.

according to s. 27(1) CIPAA, an adjudicator has jurisdiction to adjudicate a matter referred to adjudication by the parties pursuant to ss. 5 and 6 CIPAA. Section 5(1) CIPAA has provided that an "unpaid party" (defined in s. 4 CIPAA) may serve a “payment claim" on a "non-paying party" (interpreted in s. 4 CCIPAA) for "payment" (defined in s. 4 CIPAA) pursuant to a construction contract. It is clear from the definition of "payment" in s. 4 CIPAA that an unpaid party can only claim for "work done or services rendered under the express terms of a construction contract". Hence, an unpaid party cannot claim under CIPAA for any loss of profit due to a breach of a construction contract; s. 5(2)(c) CIPAA provides that a "payment claim" "shall include" a "description of the work or services to which the payment relates". Such a mandatory requirement of a "payment claim" in s. 5(2)(c) CIPAA fortifies the fact that an adjudicator's jurisdiction under CIPAA is confined to a claim for payment for "work done or services rendered" under a construction contract;

the [Long Title] provides as follows - It is clear from the [Long Title] that Parliament has intended for CIPAA to provide an expeditious recovery of "payment" for "work done or services rendered under the express terms of a construction contract" (as defined in s. 4 CIPAA) in the construction industry; and

if any party in a construction agreement (X) has suffered any loss of profit due to a breach of the agreement, X may recover such a loss in a civil suit or arbitration (if there is an arbitration agreement)." (emphasis added) [63] In FZL Power Engineering Sdn Bhd v. Norangkasa Enterprise Sdn Bhd and another case |20221 MLJU 1534, the Adjudication Decision that awarded the sum of "overpayment" was set aside. Lim Chong Fong (now COA) held as follows: “[24] … I find and hold that it is only FZLPE that can make an adjudicate payment claim against NE for non-payment or under payment of work done under the Sub-Contract. However, based on both the literal and purposive interpretation of ss. 4 and 5 the CIPAA, I find and hold that the overpayment claim of NE is not encompassed therein; hence not adjudicatable. Thus, NE has wrongly and invalidly commenced the adjudication proceedings against FZLPE. [25] The recourse of the overpayment made by NE to FZLPE has to be pursued in the civil courts.” [64] At the risk of repetition, in our case, Setiakon’s claim for late payment interest based on Payment Certificates 1 to 46, where the principal amounts had already been fully paid by Mayfair before the Payment Claim (except for Certificate 44R and Certificate 46). [65] Since the amount for the “late payment interest” was never claimed before the Payment Claim was served on Mayfair, Setiakon cannot be considered an "unpaid party" under section 4 of CIPAA

Consequently, Mayfair is not a "non-paying party," and the Payment Claim is invalid and improperly served on Mayfair. [66] Hence, the adjudicator had no jurisdiction to adjudicate the claim for late payment interest. The reasoning given by the learned Judicial Commissioner in paragraphs [36-39] & [43] of the Grounds of Judgment is untenable. [67] In light of the above deliberation, Mayfair has successfully shown to this court that the adjudicator had acted in excess of her jurisdiction pursuant to section 15(d) of CIPAA 2012. Hence, the Setting Aside Originating Summons in Appeal No. 2178 is allowed. Enforcement Originating Summons in Appeal No. 2185 [68] Concerning the Enforcement Originating Summons in Appeal No. 2185, this Court has a discretion under section 28(1) and (2) of CIPAA 2012 to enforce an adjudication decision, wholly or partly, which is valid and enforceable. Section 28(1) and (2) CIPAA provide as follows: Enforcement of adjudication decision as judgment “28. (1) 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) Conclusion [68] It is our finding that there are two (2) parts of the Respondent's claim.

Firstly, late payment interest for work done for Certificate No: 1-46 which had been fully settled.

Secondly, claim for work done and interest for Certificate No: 44R and 46. [69] For the first part of Setiakon’s claim for pure late interest payment, as said, the claim doesn’t fit into the definition of a "payment” under section 4 CIPAA 2012. Thus, by allowing the claim, the learned adjudicator has exceeded her jurisdiction. [70] For the second part of the claim, we find no appealable error. [71] At this stage, we are not concerned about the merit of the decision of the learned adjudicator as her decision can only be set aside on the grounds of excess or lack of jurisdiction or denial of natural justice under section 15 of CIPAA. [72] We therefore allow Mayfair’s appeal in Appeal No. 2178 in part i.e to the extent that a sum of RM1,610,732.87 is deducted from the amount awarded of RM4,131,813.45 and Setiakon is to refund to Mayfair the sum of RM1,610,732.87 plus interest RM95,176.42. [73] As for Mayfair’s appeal in Appeal No. 2185 we allowed the appeal in part. We vary the amount ordered under the said enforcement application on the same terms as per Appeal No. 2178. [74] Costs of RM20,000 for each appeal to be paid by Setiakon to Mayfair subject to allocator. Date: 30th October 2025 - sgd - Azmi bin Ariffin Judge Court of Appeal Malaysia Counsel For the Appellant :

Justin Voon Tiam Yu

Alvin Lai Kok Wing

Victor Pang Chee Siong [Justin Voon Chooi & Wing] For the Respondents :

Amy Hiew Kar Yi 2. Felicia Lai Wai Kim [Harold & Lam Partnership]