MCC Overseas (M) Sdn Bhd v Teng Yue Overseas Construction Sdn Bhd (JA-24C-2-01/2022)

dan (d), 24(c) & 25 Akta Pembayaran dan Adjudkasi Industri Pembinaan 2012; Dan Dalam perkara A.7, 28 & 69A k. 3 Kaedah-Kaedah Mahkamah 2012 MCC OVERSEAS (M) SDN. BHD .... PLAINTIF TENG YUE OVERSEAS CONSTRUCTION SDN. BHD .. DEFENDAN Didengar bersama SAMAN PEMULA NO: JA-24C-2-01/2022 Dalam perkara berkenaan

Adjudikasi bertarikh 29.11.2021 di bawah nombor rujukan AIAC/ADJ-3719-2021 di antara Teng Yue Overseas Construction Sdn Bhd sebagai Penuntut dan MCC Overseas (M) Sdn Bhd sebagai Responden Dan Dalam perkara s.16(1)(a) & s.16(1)(b) Akta Pembayaran dan Adjudkasi Industri Pembinaan 2012; Dan Dalam perkara A.7, 28 & 69A k 4 Kaedah-Kaedah Mahkamah 2012 MCC OVERSEAS (M) SDN. BHD .... PLAINTIF TENG YUE OVERSEAS CONSTRUCTION SDN. BHD .. DEFENDAN Dan SAMAN PEMULA NO: JA-24NCC-12-07/2022 Dalam perkara mengenai satu Adjudikasi di bawah Akta Pembayaran dan Adjudikasi Industri Pembinaan 2012 antara TENG YUE OVERSEAS CONSTRUCTION SDN. BHD. dan MCC OVERSEAS (M) SDN BHD [No. Pendaftaran AIAC/D/ADJ-3719-2021]; Dan Dalam perkara mengenai satu Keputusan Adjudikasi bertarikh 29.11.2021 oleh Adjudikator Ho Kin Kong; Dan Dalam perkara mengenai Seksyen 28 Akta Pembayaran dan Adjudikasi Industri Pembinaan 2012 (“CIPAA”); Dan Dalam perkara Aturan 7, Aturan 28, Aturan 69A dan Aturan 92 Kaedah 4 Kaedah-Kaedah Mahkamah 2012. TENG YUE OVERSEAS CONSTRUCTION SDN. BHD ... PLAINTIF MCC OVERSEAS (M) SDN. BHD .. DEFENDAN GROUNDS OF JUDGMENTS Introduction [1] These 3 cases were heard together where:

in JA-24C-1-01/2022, MCC Overseas (M) Sdn Bhd (“MCCO”) is seeking in Enclosure 1 for the adjudication decision dated 29.11.2021 (“Adjudication Decision”) be set aside pursuant to paragraphs (b) and (d) of section15 of the Construction Industry Payment and Adjudication Act 2012 (“CIPAA”) and O. 69A r. 3 of the Rules of Court 2012 (“ROC”);

in JA-24C-2-01/2022, MCCO is seeking in Enclosure 1 for the execution of the Adjudication Decision be stayed pursuant to paragraphs (a) and (b) of subsection 16(1) of the CIPAA and O. 69A r. 4 of the ROC until the disposal of JA-24C-1-01/2022 and the completion of arbitration proceedings which was commenced by MCCO vide the arbitration notice dated 19.1.2022; and

in JA-24C-12-07/2022, Teng Yue Overseas Construction Sdn Bhd (“TYO”) is seeking in Enclosure 1 for the Adjudication Decision be enforced pursuant to s. 28 of the CIPAA and O. 69A r. 5 of the ROC. [2] On the request of learned counsels for MCCO and TYO and premised on these applications related to the same parties and to the same series of events, I allowed them to be heard together. [3] As the backdrop of these cases, MCCO is the main contractor appointed by OM Materials (Sarawak) Sdn Bhd (“OMM”) vide a letter of acceptance dated 7.9.2018 and various others instruments to perform construction works for a project known as “Proposed extension work to existing OM Materials (Sarawak) Sdn. Bhd ferro silicon and manganese alloy smelting plant at Lot 41, Block 1 Kemena Land District, Samalaju Industrial Park, Bintulu, Sarawak (Packages 1, 2 & 3)” (“Project”). [4] Subsequently vide a letter of acceptance dated 27.11.2018, MCCO awarded TYO sub-contract works for civil structural, decoration, road, external works for drainage and preliminaries for the Project (“Sub-Contract Works”). [5] TYO averred that it had completed the Sub-Contract Works and also 27 Variation Works. Through Interim Claim No. 15 that ended on 20.3.2021, TYO has claimed a total of RM83,055,535.82. [6] In the premises of alleged non-payment, TYO on 15.4.2021 initiated an adjudication proceeding against MCCO pursuant to the CIPAA under reference No. AIAC/ADJ-3719-2021 (“Adjudication Proceeding”) and Mr Ho King Kong was appointed as the adjudicator (“Adjudicator”). [7] On 29.11.2021, the Adjudicator delivered the Adjudication Decision in favour of TYO as follows inter alia:

MCCO is to pay TYO the adjudicated sum of RM13,248,244.68 (“Adjudicated Sum”) within 30 days from the date of the Adjudication Decision;

MCCO is to pay TYO a simple interest of 5% per annum on the Adjudicated Sum from 25.2.2021 until the date of full payment;

MCCO is to pay TYO the taxed costs of RM50,000.00 within 30 days from the date of the Adjudication Decision; and

MCCO is to pay TYO the Adjudicator’s and the Asia International Arbitration Centre’s fees amounting to RM60,800.00; [8] Since MCCO failed to adhere to the Adjudication Decision on or before 29.12.2021 as directed by the Adjudicator, on 6.12.2021, TYO sent a letter to MCCO to claim for the Adjudicated Sum together with costs and expenses. [9] On 3.1.2022, TYO issued to MCCO a Statutory Notice pursuant to ss. 465(1)(e) and 466(1) of the Companies Act 2016 demanding the payment of RM13.89 million from MCCO based on the Adjudication Decision. [10] On the same day, TYO filed an Originating Summons in the High Court of Kuala Lumpur vide OS No. WA-24C-3-01/2022 to enforce the Adjudication Decision. By an order dated 27.5.2022, this OS was later transferred to the Johor Bahru High Court and given a new registration number of JA-24C-12-07/2022. [11] On 17.1.2022, MCCO commenced an arbitration proceeding against TYO as to dispose of all disputes and bone fide claims between the parties arising from the Sub-Contract Works. [12] Subsequently, on 19.1.2022, MCCO filed an application to set aside the Adjudication Decision vide OS No. JA-24C-1-01/2022. [13] On the next day, MCCO filed another action vide OS No. JA-24C-2- 01/2022 to stay the execution of the Adjudication Decision pending the disposal of the arbitration proceeding. [14] On 28.1.2022, TYO filed a winding up petition against MCCO in the High Court of Kuala Lumpur vide Petition No. WA-28NCC-77-01/2022. The outcome of the petition is still pending during the hearing of these applications. JA-24C-1-01/2022 [15] I begin with the case of JA-24C-1-01/2022 wherein MCCO is seeking for the Adjudication Decision dated 29.11.2019 be set aside. [16] MCCO raised the following grounds as to set aside the Adjudication Decision:

there is an ongoing arbitration proceeding;

merits of the Adjudication Decision; and

there was a denial of the natural justice and the Adjudicator had acted in excess of his jurisdiction. Effect of an ongoing arbitration proceeding [17] On the 1st ground, MCCO submitted that it had filed a notice to refer to arbitration on 17.1.2022. Since this dispute, albeit was adjudicated by the Adjudicator, was referred to the arbitration, MCCO averred that the Adjudication Decision must be set aside. [18] On this issue, it is apt to state the relationship between an adjudication and other dispute resolution processes under the CIPAA. S. 37 of the CIPAA reads: Relationship between adjudication and other dispute resolution process 37.

A dispute in respect of payment under a construction contract may be referred concurrently to adjudication, arbitration or the court.

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

An adjudication proceeding is terminated if the dispute being adjudicated is settled by agreement in writing between the parties or decided by arbitration or the court. [19] It is crystal clear that subsection 37(1) of the CIPAA allows a dispute in respect of payment under a construction contract be referred concurrently either to adjudication, arbitration or the court. Then, subsection 37(2) of the CIPAA states that a reference to an arbitration or court in respect of a dispute which is being adjudicated shall not bring the adjudication proceeding to an end nor affect the adjudication proceeding. The adjudication proceeding is only terminated if the dispute being adjudicated is settled by any agreement in writing between the parties or decided by arbitration or the court (s. 37(3) of the CIPAA). [20] Since s. 37 of the CIPAA allows an arbitration proceeding be carried out concurrently with the adjudication proceeding and the former has no effect on the latter, then MCCO’s argument that the Adjudication Decision has to be set aside due to the fact that the same dispute was also referred to the arbitration proceeding, is blatantly a non-starter. [21] Further, s. 15 of the CIPAA states that an adjudication decision may be set aside only on limited grounds. The section reads – Improperly procured adjudication decision 15. An aggrieved party may apply to the High Court to set aside an adjudication decision on one or more of the following grounds:

the adjudication decision was improperly procured through fraud or bribery;

there has been a denial of natural justice;

the adjudicator has not acted independently or impartially; or

the adjudicator has acted in excess of his jurisdiction. [22] It is clear that a pending arbitration proceeding is not a valid ground for an adjudication decision to be set aside. Merits of the Adjudication Decision [23] On the 2nd ground, MCCO averred that there are errors by the Adjudicator meriting for the Adjudication Decision to be set aside. They are, inter alia:

the Adjudicator approbated and reprobated in his findings on interpretation of the terms of the Sub-Contract documents. The Adjudicator held that TYO failed to adhere to the provisions of the contracts between TYO and OMM but at the same time held that those contracts were inapplicable here;

the award of RM7,984,440.06 for the retention money and performance bond should not be allowed as it is premature due to the fact that TYO failed to comply with the terms in the contracts between TYO and OMM;

the Adjudicator was in error in his finding that the Sub-Contract Works were 100% completed by relying on the Interim Payment Certificate No. 13 which was allegedly certified by MCCO. MCCO averred that it never certified the Interim Payment Certificate No. 13. This error by the Adjudicator significantly affected the Adjudication Decision; and

the Adjudicator failed to consider various defences raised by MCCO such as the Sub-Contract Works were not 100% completed as some material defects were not rectified by TYO and the refusal of the Adjudicator to MCCO’s request for responding to the fresh allegations and materials raised by TYO. [24] On this issue, as alluded to earlier, s. 15 of the CIPAA allows any party who aggrieves by an adjudication decision to apply to the High Court to set aside that decision on the following grounds only:

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. [25] It is worth noted that the wordings of s. 15 of the CIPAA reflect that the provision therein is not an appeal provision. As such, unlike the appeal provision, the decision of an adjudicator cannot be reviewed on merits as held in ACFM Engineering & Construction Sdn Bhd v. Esstar Vision Sdn Bhd & another appeal [2016] 1 LNS 1522; [2016] MLJU 1776, where the Court of Appeal held that – [21] There were no complaints by the Appellant that the adjudicator had got the disputes on a completely wrong footing. In fact, no complaint was made at all and the adjudication process was carried out premised on those issues. If we were to consider the complaints of the Appellant, we would be looking into the merits of the decision of the adjudicator. In the context of section 15 of CIPPA 2012, it cannot be the function of the Court to look into or review the merits of the case or to decide the facts of the case. The facts are for the adjudicator to assess and decide on. The Court's function is simply to look at the manner in which the adjudicator conducted the hearing and whether he had committed an error of law during that process. Such error of law relates to whether he had accorded procedural fairness to the Appellant. In the context of this case, the complaints of the Appellant were nothing but complaints of factual findings of the adjudicator which in our view cannot be entertained by us. [26] It has to be noted also that s. 15 of the CIPAA is neither a judicial review of an adjudication decision. Again, the high court should not consider merits of an adjudication decision during the setting aside application under s. 15 of the CIPAA. This was well explained by Wong Kian Kheong J (now JCA) in Naza Engineering & Construction Sdn Bhd v. SSL Dev Sdn Bhd [2019] 1 LNS 2331; [2020] 9 MLJ 499, where the Lordship held that – [14] My understanding of the court's power to set aside an AD is as follows:

CIPAA does not provide a right to any party to an AD to appeal against the AD;

an AD is provisional under s. 13(a) to (c) CIPAA and may be set aside by the High Court pursuant to any of the paragraphs in s. 15(a) to (d) CIPAA (Setting Aside Application). A Setting Aside Application is not an appeal to the High Court against the AD. Nor is a Setting Aside Application a judicial review of the AD. Hence, the High Court cannot review the merits of an AD in a Setting Aside Application - please see the Court of Appeal's judgment delivered by David Wong Dak Wah JCA (as he then was) in ACFM Engineering & Construction Sdn Bhd v. Esstar Vision Sdn Bhd & another appeal [2016] 1 LNS 1522;[2016] MLJU 1776, at [21]; [27] Hence, the main concern of this Court is only to determine whether MCCO has established the existence of any of the grounds set out in s. 15 of the CIPAA that warrants the Adjudication Decision be set aside without looking into the merit of the said Decision. [28] Again, MCCO’s argument on the merit of the Adjudication Decision shall not be the ground to set aside the decision. Denial of natural justice as the Adjudicator has acted in excess of his jurisdiction [29] On the 3rd ground, MCCO submitted that it has been denied of the natural justice as the Adjudicator had acted in excess of his jurisdiction based on the following grounds:

demanded sum for the retention money and performance bond of RM7,984,440.06 is premature as TYO was in breach of the terms in subcontract documents;

demanded sum for the variation of RM 8,714,054.40 is invalid as there was no instruction given by MCCO or its employees;

the Adjudicator has raised issues that had not been pleaded by both MCCO and TYO based on assumption on the date of letter of acceptance. Therefore the Adjudicator was acting in excess of jurisdiction;

the Adjudicator has made inconsistent findings on terms and obligation of contract which is a breach of natural justice;

the Adjudicator has failed to consider the defence and explanation about the defects of the works done by TYO in the Adjudication Proceeding. Again the Adjudicator was acting in excess of jurisdiction; and

the Adjudicator has wrongly deduced that MCCO approved the Payment Certificate No 13 wherein it was just a draft. [30] During this application, counsel for both parties made lengthy submissions on this matter but I do not propose to go into them in great detail. Suffice it to say that upon perusal of the Adjudication Decision, I find that both parties were given the opportunity to submit their payment claim and payment response and followed by adjudication claim and adjudication response. The said arguments were duly raised and ventilated during the Adjudication Proceeding. This can be seen in the Adjudication Decision wherein the Adjudicator had thoroughly dealt with these matters. Thus, it is my view that all arguments and defences from both parties were duly taken into consideration by the Adjudicator. [31] It is a cardinal principle that an adjudicator being the commander in an adjudication proceeding is not only presiding the proceeding but is free to conduct it in the manner that he deems fit as long as he complies with the procedures set out in the CIPAA, acts impartially and observes to the rules of natural justice. As such, the CIPAA gives an adjudicator wide range of duties, powers and jurisdiction vide ss. 24, 25 and 27 to conduct the proceeding as he has a very limited timeframe given by s. 12 of the CIPAA to deliver his decision. Without such duties, powers and jurisdiction conferred to an adjudicator, the main purpose and object of the introduction of the CIPAA by the government as to provide a speedy dispute resolution mechanism for parties to resolve payment disputes in the construction industry would render nugatory. [32] It has to be noted that in a setting aside application, the role of the High Court is not as a fault-finder less still a punisher. At this point I find instructive the majority decision of the Court of Appeal case of Martego Sdn Bhd v. Arkitek Meor & Chew Sdn Bhd & Another Appeal [2018] 2 CLJ 163 where it was stated by David Wong Dak Wah JCA in the following passage: [55] The courts' power to set aside adjudicators' decision is circumscribed by statute in s. 15 CIPAA 2012 and it is not a provision which allows the courts to sit in an appellate jurisdiction. The grounds which the courts can rely on to set aside the adjudicator's decision are limited such that the courts are not allowed to look into the merits of parties' case. The courts' prima facie duty must be to uphold the adjudicator's decision and not to look at it with a fine-tooth comb with the aim to find the faults in the adjudicator's decision. As long as the learned adjudicator had approached his task by adhering to the due process of his adjudication, the courts will not interfere. Only with this approach by the courts, will the aim of CIPAA 2012 of providing a regime to alleviate the cash problem faced by contractors in the building industry be addressed and achieved. [33] The same principle was echoed by ACFM Engineering & Construction Sdn Bhd (supra) where the Court of Appeal concluded its judgment by saying this – [24] This was simply a case where the losing party was not happy that it had obtained an unfavourable decision and tried its chance in the judicial system. The law as it exists now correctly limits the Court's functions which expressly do not include to review the correctness of the adjudicator's decision. As pointed by the learned judge, the Court's intervention is only in very exceptional circumstances which are far and few in between. The prima facie view of the Court must be to affirm the adjudicator's decision unless the losing party can show that it had complied with the thresholds listed in section 15 of CIPPA 2012. [34] As alluded to earlier, all MCCO’s arguments were canvassed and ventilated by the Adjudicator in the Adjudication Decision. Nevertheless, I want to deal with MCCO’s allegation that the Adjudicator has raised issues which have not been pleaded by both MCCO and TYO especially on the date of handover of the Project site by MCCO to TYO. Although this issue was never raised by either party, I agree with the Adjudicator that this issue relating to the date is very pivotal as to determine whether TYO is entitled for the performance bond or otherwise. As such, it is my view that there is no denial of natural justice or the Adjudicator has acted in excess of his jurisdiction when the Adjudicator had addressed all issues which he considered important for the sake of justice as they related to the payment claimed even thought they were not raised by either party. [35] In any event, it is my view that even if the Adjudicator was wrong in holding the MCCO’s arguments on those issues, that would not warrant the Adjudication Decision to be set aside. My view is fortified by the decision of Lee Swee Seng J (now JCA) in BM City Realty & Construction Sdn Bhd v. Merger Insight (M) Sdn Bhd & Another Case [2016] 1 LNS 1096, where the Lordship held as follow: "[62] I agree with learned counsel for MISB that even if there was a failure to take into account of payment made to the NSCs, it is merely an error of findings of facts/law. Such an error does not require the Adjudication Decision to be set aside. There will not be a denial of natural justice if the Adjudicator had addressed all the right issues even in the wrong way. The adjudicator's decision will nevertheless be temporary binding. It is only when the adjudicator has answered the wrong issues that his decision will be a nullity. See Bouygues (UK) Ltd v. Dahl-Jensen (UK) Ltd [2001] 1 All ER (Comm) 1041; Bina Puri Construction Sdn Bhd v. Hing Nyit Enterprise Sdn Bhd [2015] 8 CLJ 728. [63] In Bouygues (UK) Ltd's case, the Court of Appeal in UK laid down the following tests with respect to determining if an adjudicator has acted within jurisdiction though arriving at a so-called wrong decision. Alluding to the scheme of statutory adjudication in UK Chadwick LJ gave this helpful guide at pp 1047-1048: "26. The purpose of those provisions is not in doubt. They are to provide a speedy method by which disputes under construction contracts can be resolved on a provisional basis. The adjudicator's decision, although not finally determinative, may give rise to an immediate payment obligation. That obligation can be enforced by the courts. But the adjudicator's determination is capable of being reopened in subsequent proceedings. It may be looked upon as a method of providing a summary procedure for the enforcement of payment provisionally due under a construction contract.

The first question raised by this appeal is whether the adjudicator's determination in the present case is binding on the parties subject always to the limitation contained in s. 108(3) and in paras 4 and 31 of the Model Adjudication Procedure to which I have referred. The answer to that question turns on whether the adjudicator confined himself to a determination of the issues that were put before him by the parties. If he did so, then the parties are bound by his determination, notwithstanding that he may have fallen into error. As Knox J put it in Nikko Hotels (UK) Ltd v. MEPC plc [1991] 2 EGLR 103 at 108, in the passage cited by Buxton LJ, if the adjudicator has answered the right question in the wrong way, his decision will be binding. If he has answered the wrong question, his decision will be a nullity.

I am satisfied, for the reasons given by Buxton LJ, that in the present case the adjudicator did confine himself to the determination of the issues put to him. This is not a case in which he can be said to have answered the wrong question. He answered the right question. But, as is accepted by both parties, he answered that question in the wrong way. That being so, notwithstanding that he appears to have made an error that is manifest on the face of his calculations, it is accepted that, subject to the limitation to which I have already referred, his determination is binding upon the parties.". Conclusion for the setting aside application [36] As conclusion, based on the abovementioned authorities and grounds, clearly MCCO had failed to satisfy the Court that there was any breach of natural justice nor the Adjudicator has acted in excess of his jurisdiction as alleged. In addition, MCCO should not use the ground of breach of natural justice as a backdoor way to set aside the Adjudication Decision made after both parties have been given the opportunity to submit their arguments and duly adjudicated by the Adjudicator. Premised on the discussions alluded to in the above, I dismiss MCCO’s application in Enclosure 1 with costs. JA-24C-2-01/2022 [37] Now, I discuss the merit of MCCO’s application in JA-24C-2- 01/2022 for the execution of the Adjudication Decision be stayed until the disposal of JA-24C-1-01/2022 and the completion of arbitration proceedings commenced by MCCO vide the arbitration notice dated 19.1.2022. [38] On the power to stay the execution of an adjudication decision, s. 16 of the CIPAA reads – Stay of adjudication decision 16.

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. [39] It is my view that s. 16 of the CIPAA is written in a plain language that the stay of an adjudication decision can only be allowed in any of two situations namely when an application to set aside the adjudication decision has been made or the dispute was referred to an arbitration or the court for final determination. [40] It is no doubt that MCCO has filed an application in JA-24C-1- 01/2022 to set aside the Adjudication Decision. However, I have decided to dismiss that application. Thus, the reason for the stay because of pending disposal of MCCO’s application in JA-24C-1-01/2022 is no longer a valid ground. [41] On the MCCO’s ground for stay because of it has filed a notice to refer to arbitration on 17.1.2022, I find that although s. 16 allows an adjudication decision to be stayed when the subject matter of the adjudication decision is pending final determination by arbitration, this does not mean that MCCO must be given an automatic stay. This can be seen in View Esteem Sdn Bhd v. Bina Puri Holdings Bhd [2019] 5 CLJ 479; [2018] 2 MLJ 22 where the Federal Court held that the court has to evaluate the merit of any application for stay of an adjudication decision before allowing the application. Zulkefli Ahmad Makinuddin PCA when delivering the judgment of the Court said – [84] The High Court and the Court of Appeal in the present case took the view that no stay was available unless the appellant could show that the respondent was unable to repay the adjudication sum. With respect we are of the view that the correct approach for the High Court under s. 16 of CIPAA would be to evaluate each case on its merits without the fetter of a pre-determined test not found in the section itself namely the financial capacity of the contractor to repay. It could be a factor but not the only factor. [42] It is my view that the settled-law on stay application which requires the applicant to show the existence of special circumstances to justify the application (See Kosma Palm Oil Mill Sdn Bhd & Ors v. Koperasi Serbausaha Makmur Bhd [2003] 4 CLJ 1, Re Kong Thai Sawmill (Miri) Sdn Bhd; Ling Beng Sung v. Kong Thai Sawmill (Miri) Sdn Bhd & Ors (No 2) [1974] 1 LNS 136; [1976] 1 MLJ 131, Kerajaan Malaysia v. Jasanusa Sdn Bhd [1995] 2 CLJ 701; and Kerajaan Malaysia v. Dato' Hj Ghani Gilong [1995] 3 CLJ 161) is also applicable in an application to set aside the adjudication decision. [43] What amounts to special circumstances can be found in the case of Leong Poh Shee v. Ng Kat Chong [1965] 1 LNS 90; [1966] 1 MLJ 86 where Raja Azlan Shah J (as His Majesty then was) stated: Special circumstances, as the phrase implies, must be special under the circumstances as distinguished from ordinary circumstances. It must be something exceptional in character, something that exceeds or excels in some way that which is usual or common. [44] In Ming Ann Holdings Sdn Bhd v. Danaharta Urus Sdn Bhd [2002] 3 CLJ 380 the Court of Appeal held that – The approach taken by most judges appears to be that a successful litigant should not be deprived of the fruits of a judgment obtained in his favour, unless there are special circumstances (or special grounds) that justify a stay of execution to be granted. The weight of authorities appears to me to say that the special circumstances must be special, not ordinary, common or usual circumstances and that go to the execution of the judgment and not to the validity or correctness of the judgment (or merits of the appeal). Many judges considered the question whether the appeal, if successful, is rendered nugatory under the head of special circumstances. (Sometimes, the phrase used is whether the appellant, if successful, can be restored to its former position). The general view appears to be that that is the more, if not the most, important factor of all. Of course, no one ever attempts to define special circumstances, for good reasons. It is also a common view that it depends on the facts of a particular case. Thus, "business realities" has been taken into consideration, I believe under this head. It is a common view that merits of the appeal (or correctness or validity of the judgment) is not special circumstances. Some judges do not use the term "special circumstances". They straight away consider whether the appeal, if successful, would be rendered nugatory. Examples are Mohamed Mustafa and Gentali (M) Sdn. Bhd. v. Kawasaki Sunrock Sdn. Bhd. [1996] 3 MLJ 597 (CA) and the term was used "in the sense that the appellant is deprived of the fruits of his success." I think it does not matter whether the nugatory factor is considered under the head "special circumstances" or not, so long as it is considered. [45] In this context, besides the reason of the subject matter of the Adjudication Decision is pending final determination by arbitration, MCCO also listed the following being special circumstances which entitling it to stay the Adjudication Decision:

TYO has an unhealthy financial position to repay the Adjudicated Sum if final determination in arbitration is favourable to the latter; and

errors in the Adjudication Decision especially when the Adjudicator made inconsistent interpretation of Sub-contract documents. [46] For the 1st ground raised by MCCO, as held by View Esteem Sdn Bhd (supra), the financial capacity of the successful litigant to repay could be a factor but not the only factor. In this application for stay of execution of the Adjudication Decision, MCCO averred that there was an 83.68% decrease of TYO’s revenue for the year ending 2020 in comparison with the year ending 2019. On this issue, it is a judicial notice that all construction industries had suffered adverse financial impacts due to the Covid-19 pandemic and the Movement Control Order imposed by the Government in 2019 and 2020. Thus, it is not something strange that TYO’s revenue was significantly affected during that financial years. Nevertheless, I agree with learned counsel for TYO that in overall the financial status of TYO is still stable. As at the hearing date, TYO has current assets of RM199,286.303.00 and non-current assets of RM3,253,389.00. These assets are available to be liquidated and more than sufficient as to repay MCCO in the event the decision of the arbitration is in favour of MCCO. [47] On the ground of errors made by the Adjudicator in the Adjudication Decision when he made inconsistent interpretation of Sub-contract documents, I find that MCCO tried to raise merit of the Adjudication Decision in this application for stay of execution. It is trite that merit of setting aside application would not be considered in any stay of execution application. In Serangoon Garden Estate Ltd. v. Ang Keng [1953] 1 LNS 98; [1953] 19 MLJ 116, Brown J held that merits in an appeal (or in the stay of application in our case) cannot be a sufficient ground on which to grant a stay of execution. Thus, I am unable to accept MCCO’s argument on this issue because it would be tantamount to a review of the merit of the Adjudication Decision. [48] Premised from the above, I find that MCCO failed to demonstrate that there are special circumstances warranting the stay of the Adjudication Decision. Thus, again I dismiss MCCO’s application in Enclosure 1 with costs. JA-24C-12-07/2022, [49] In this case, TYO is seeking in Enclosure 1 for the Adjudication Decision dated 29.11.2021 be enforced. [49] It is important to note that s. 13 of the CIPAA states that an adjudication decision is binding unless it is set aside by the high court. Effect of adjudication decision 13. The adjudication decision is binding unless —

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

the subject matter of the decision is settled by a written agreement between the parties; or

the dispute is finally decided by arbitration or the court. [50] TYO’s application is premised on the provision of s. 28 of the CIPAA which reads: "Enforcement of adjudication decision as judgment 28.

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.

The order made under subsection (2) may be executed in accordance with the rules on execution of the orders or judgment of the High Court.". [51] In Inai Kiara Sdn Bhd v. Puteri Nusantara Sdn Bhd [2019] 2 CLJ 229; [2019] 1 MLRA 207 the Court of Appeal held that: "[24] Section 28 confers discretion on the High Court. Although there are no express terms as to how that discretion is to be exercised, in our opinion, the discretion must be exercised judiciously, having regard to the underlying facts and the applicable principles under CIPAA 2012. We must also bear in mind principles of statutory interpretation; that we cannot read into s. 28 terms which are not there, or give s. 28 a construction which cannot bear up when the other provisions in the Act are read and taken into consideration. [25] From a reading of CIPAA 2012, in particular, ss. 13, 15, 16, 27 and 31, it is plain that though s. 28 vests the High Court with discretionary power, it does not extend to requiring the applicant to show that there are no grounds for setting aside the adjudication decision under s. 15. All that the applicant needs to do is to satisfy the High Court that there is an adjudication decision that has been rendered in the applicant's favour, that there has been non-payment of the adjudicated sum by the date specified in the adjudication decision, and that there is no prohibition to the grant of the order that is sought. [26] By this, we mean that the adjudication decision has not been set aside or stayed, that there is no written settlement of the subject matter between the parties, or that there is no final decision rendered on the payment claim, whether made in arbitration or by a court of law. Once these matters are established as matters of fact, the order to enforce ought to be granted. When making the order, the High Court may also make appropriate orders in respect of the whole or part of the adjudicated sum including make orders on interest – see sub-s. 28(2)." [52] Applying the above legal principles to the facts in this case, TYO has plainly satisfied the Court that –

the Adjudication Decision is clearly in TYO’s favour;

there has been non-payment of the Adjudicated Sum by MCCO within the time directed in the Adjudication Decision;

I have dismissed MCCO’s application to set aside the Adjudication Decision in JA-24C-1-01/2022 and in JA-24C-2- 01/2022, I have also dismissed MCCO’s application for stay of execution of the Adjudication Decision; and

there is no written settlement of the subject matter between MCCO and TYO. [53] It has to be noted that since the Adjudication Decision was validly obtained by TYO, then it has to be given effect. Otherwise the core purpose and intent behind the enactment of CIPAA as to ensure that the successful claimant is paid promptly as to alleviate the cash flow problem faced by the claimant being a contractor in the building industry would be futile. Thus, I allow TYO’s application in Enclosure 1 with costs. Dated: 29.5.2023 -SIGNED- (SHAMSULBAHRI BIN HAJI IBRAHIM) Judicial Commissioner, Johor Bahru High Court Counsels: For MCC Overseas (M) Sdn Bhd – Khong Zhi Jian; Messrs. Tan & Khong Chambers For Teng Yue Overseas Construction Sdn Bhd – K. Sheela T. Vinayaka Das; Messrs. Sheela Vinayaka & Co Cases referred to:  ACFM Engineering & Construction Sdn Bhd v. Esstar Vision Sdn Bhd & another appeal [2016] 1 LNS 1522; [2016] MLJU 1776,  BM City Realty & Construction Sdn Bhd v. Merger Insight (M) Sdn Bhd & Another Case [2016] 1 LNS 1096  Inai Kiara Sdn Bhd v. Puteri Nusantara Sdn Bhd [2019] 2 CLJ 229; [2019] 1 MLRA 207  Kerajaan Malaysia v. Dato' Hj Ghani Gilong [1995] 3 CLJ 161  Kerajaan Malaysia v. Jasanusa Sdn Bhd [1995] 2 CLJ 701;  Kosma Palm Oil Mill Sdn Bhd & Ors v. Koperasi Serbausaha Makmur Bhd [2003] 4 CLJ 1,  Leong Poh Shee v. Ng Kat Chong [1965] 1 LNS 90; [1966] 1 MLJ 86  Ling Beng Sung v. Kong Thai Sawmill (Miri) Sdn Bhd & Ors (No 2) [1974] 1 LNS 136  Martego Sdn Bhd v. Arkitek Meor & Chew Sdn Bhd & Another Appeal [2018] 2 CLJ 163  Naza Engineering & Construction Sdn Bhd v. SSL Dev Sdn Bhd [2019] 1 LNS 2331; [2020] 9 MLJ 499  Re Kong Thai Sawmill (Miri) Sdn Bhd; ; [1976] 1 MLJ 131  View Esteem Sdn Bhd v. Bina Puri Holdings Bhd [2019] 5 CLJ 479; [2018] 2 MLJ 22 Legislations referred to:  Construction Industry Payment and Adjudication Act 2012 - s. 13, 15, 16, 28 & 37