Merah Bayu Global Sdn. Bhd. v Tk Elevator Malaysia Sdn. Bhd. (WA-24C-145-09/2023)

the application by TK Elevator Malaysia Sdn Bhd (‘TKE’)

the application by Merah Bayu Global Sdn Bhd (‘Merah Bayu’) in O.S. No. WA-24C-145-09/2023 (‘O.S. No. 145’) to stay the AD pending final determination by arbitration (‘Stay Application’). [2] After having considered the cause papers and the oral and written submissions of the parties, I had dismissed the Stay Application and allowed the Enforcement Application. These are my full grounds of judgment. The Cause Papers [3] The cause papers for each application are as follows:

TKE’s O.S. dated 21.8.2023 (encl. 1);

TKE’s Affidavit In Support (‘AIS’) affirmed by its Managing Director, Leong Mun Yeow on 21.8.2023 (encl. 2);

Merah Bayu’s Affidavit In Reply (‘AIR’) affirmed by its Director, Maizatul Akhma binti Ahmad on 21.9.2023 (encls. 5 - 8); and

TKE’s AIR affirmed by the same deponent on 10.10.2023 (encl. 9).

Merah Bayu’s O.S. dated 22.9.2023 (encl. 1);

Merah Bayu’s AIS affirmed by the same deponent on 21.9.2023 (encls. 2 - 5);

TKE’s AIR affirmed by the same deponent on 10.10.2023 (encl. 7); and

Merah Bayu’s AIR affirmed by the same deponent on 24.10.2023 (encl. 8). Background Facts [4] TKE is a company incorporated in Malaysia and having its business address Level 18, The Pinnacle Persiaran Lagoon, Bandar Sunway, 46150 Petaling Jaya, Selangor. TKE is a sub-contractor for the Project. [5] Merah Bayu is a company incorporated in Malaysia and having its registered address at 36A, Jalan Datuk Sulaiman, Taman Tun Dr Ismail, 60000 Kuala Lumpur, Wilayah Persekutuan and business address at No. 16-1, Blok 3, Jalan PDS 1, PD Sunggala Gateway, 71050 Teluk Kemang, Negeri Sembilan. Merah Bayu is the Main Contractor for the Project. [6] IRDK Hotel Management Sdn. Bhd. was the employer of the project known as the “Proposed Refurbishment To An Existing 93 Room Hotel (Presently Known As Cozzi Hotel) At Lot 6003, KM 13, Jalan Pantai, Telok Kemang 71050 Port Dickson, Negeri Sembilan Untuk Tetuan IRDK Hotel Management Sdn Bhd” (‘Project’). [7] By way of the Letter of Award dated 8.2.2018 (‘LoA’), Merah Bayu as the main contractor of the Project had awarded the Lift Installation Sub- Contract Works (‘Works’) for the Project to TKE for the fixed lump sum price of RM243,800.00 including GST. [8] Clause 17 of the LoA provides that the terms and conditions in seven TKE’s submission letters and the Performance Specification for the Works shall constitute an integral part of the contract. [9] Clause 18 of the LoA states, among others that, until such time formal sub-contract documents are prepared and executed, TKE’s tender documents and the LoA shall constitute a binding contract between Merah Bayu and TKE. [10] Furthermore, the parties agreed that the Agreement and Conditions of PAM Sub-Contract 2006 (‘PAM Sub-Contract 2006’) shall apply. [11] A dispute arose between the parties due to non-payment by Merah Bayu for alleged works done by TLE for the sum of RM101,187.50 and this eventually led to the submission of the Payment Claim dated 20.9.2022 pursuant to s 5 of the CIPAA by TKE for the said sum being the unpaid Progress Claim No. 4 dated 21.8.2019. [12] Merah Bayu submitted its Payment Response on 5.10.2022 contending, among others, that the Payment Claim was not under the jurisdiction of the CIPAA and that the claim was baseless as no element of non-payment existed. [13] This was followed with the usual adjudication papers, namely, the Notice of Adjudication, Adjudication Claim, Adjudication Response and Adjudication Reply. [14] In the AD, the Adjudicator identified four issues for his determination i.e. –

jurisdictional challenge against the Adjudicator’s authority to determine the adjudication and whether the Payment Claim and Adjudication Claim comply with the requirements of the CIPAA;

whether TKE is entitled to payment for the sum of RM101,187.50 under Progress Claim No. 4;

whether Merah Bayu has any basis to withhold the retention sum; and

whether Merah Bayu was entitled to liquidated damages. [15] In paragraph 171 of the AD, the Adjudicator decided that – “1. That the Claimant be awarded RM101,187.50 pursuant to Section 12 (5) of the CIPAA 2012.

The Respondent shall bear the full costs of the Adjudicator's fees and AIAC's fees which the Claimant had paid previously.

The costs of the adjudication proceedings are to be borne by the Respondent pursuant to section 18(1) of CIPAA 2012 in the amount of RM25,717.72 which shall include the Adjudicator's fees in the amount of RM5,760.00, party to party costs (legal costs) of RM18,047.60 and AIAC Fees of RM1,910.12.

The Respondent shall also pay simple interest to the Claimant on the unpaid amount at 7.15% per annum from the date the Payment Claim was served on the Respondent (21st September 2022) until full settlement of the unpaid amount pursuant to Section 25 (o) of the

The adjudicated amount and costs for the adjudication proceedings are to be paid by the Respondent to the Claimant within ten (10) working days from the date of this Award pursuant to Section 12 (5) of the CIPAA

2012.”. Merah Bayu’s Written Submission (encl. 13) [16] The learned counsel for TKE, Mr. Deepak Mahadevan had, during the hearing, drawn the attention of the Court to the fact that Merah Bayu had filed encl. 13 four days after the date as directed by the Court and no application was made to the Court for an extension of time or leave to file the submission beyond the stipulated time period. [17] Mr. Thilagan Mehanathan who appeared for Merah Bayu explained that they had overlooked the date as the lead counsel was out of the country and Mr. Thilagan thought the filing date was one week before the hearing. [18] However, the excuse proffered, which is certainly flimsy, came too late in the day as it is incumbent on the learned counsel to write to the Court to apply for an extension of time to file the written submission and providing reasons for the Court to consider. [19] Nevertheless, I had considered encl. 13 in my deliberations and the issue of late filing of encl. 13 was taken as a factor in the determination of the costs at the end of the hearing as submitted by Mr. Deepak. I. The Stay Application [20] As there were two applications before the Court, I had considered and decided the Stay Application before the Enforcement Application. [21] The Stay Application was made pursuant to s 16(1)(b) CIPAA whereby a stay of the AD may be granted on the ground that the subject matter of the AD is pending final determination by arbitration or the court. [22] The grounds in support of the Stay Application as stated in O.S. are that: “1) The Plaintiff has commenced Arbitration Proceedings; 2) The Defendant would be indebted to the Plaintiff in the sum of RM 1,773,813.00 if the Plaintiff’s claims are allowed in the Arbitration Proceedings; 3) This indebtedness arises because the Plaintiff has been held liable by the Employer due to the breaches of the Work even though those breaches are directly attributed to the Defendant’s actions; 4) There is no urgency in respect of the payment sought as the CIPAA proceedings were not commenced with haste by the Defendant.”. [23] Merah Bayu contended that the AD should be stayed because –

it has served the Notice of Arbitration dated 21.9.2023 on TKE wherein the issues raised in the said Notice pertain to the same adjudicated matters, and that it has a claim sum against TKE that is more than the adjudication amount; and

there is no urgency in respect of the payment sought by TKE against Merah Bayu as the adjudication proceeding was not commenced with haste by TKE (see paragraphs 28 - 35, AIS). [24] It is trite law that the threshold requirement in s 16(1)(b) CIPAA is only met if the arbitration proceeding has already commenced in accordance to the terms of the contract (see Foster Wheeler E & C (Malaysia) Sdn Bhd v Arkema Thiochemicals Sdn Bhd and another case [2015] MLJU 1952 and Classic Series Sdn Bhd v Ng Lung Yang (Trading under the name and style of ‘NLY Coating’) [2023] MLJU 2324). [25] In this case, Clause 29.1 of the PAM Sub-Contract 2006 provides that: “29.1 In the event that there is a dispute over any adjudicator's decision, and/or any dispute of whatsoever kind between the Contractor and Sub-Contractor in connection with the Sub-Contract, it shall be referred to an arbitrator agreed between the parties or failing such agreement, the arbitrator shall be appointed in accordance with Clause 34.6 of the Main Contract Conditions. Such arbitration proceedings shall not commence until after practical completion or alleged practical completion of the Main Contract Works or determination or alleged determination of the Sub-Contractor's employment or abandonment of the Sub-Contract Works or Main Contract Works. The arbitration proceedings shall be in accordance with the provisions of the Arbitration Act 2005 or any statutory modification or re-enactment to the Act and the PAM Arbitration Rules or any modification or revision to such rules.”. [26] Article 2 of the PAM Arbitration Rules on the “Commencement of the Arbitration” states that: “2.1 The arbitration shall be regarded as commenced when one party submits to the Appointing Authority an application in the form prescribed by PAM requesting him to appoint the Arbitrator accompanied by an application fee to be determined from time to time by PAM.”. [27] Up until the filing of the Stay Application, no application in the form prescribed by PAM as stipulated in Article 2.1 as quoted above was submitted by Merah Bayu to the Appointing Authority requesting for the appointment of an arbitrator accompanied by an application fee. [28] In the circumstances, Merah Bayu has failed to comply with the requirements under Article 2.1 of the PAM Arbitration Rules on the commencement of an arbitration proceeding. Mere service of the Notice of Arbitration does not of itself equate to commencement of the arbitration proceedings against TKE according to the terms of the contract. [29] Therefore, I find and hold that Merah Bayu has not satisfied the threshold test under s 16(1)(b) CIPAA. [30] Merah Bayu additionally cited the celebrated case of View Esteem Sdn Bhd v Bina Puri Holdings Berhad [2018] 2 MLJ 22 which had laid down the test for a stay under s 16 CIPAA where there are clear errors or to meet the justice of the individual case. The meaning of “clear errors” and “justice of the case” has been elucidated in several cases such as Maju Holdings Sdn Bhd v Spring Energy Sdn Bhd [2020] MLJU 1162, EA Technique (M) Sdn Bhd v Malaysia Marine and Heavy Engineering Sdn Bhd [2020] MLJU 2058, Office 2 Go (M) Sdn Bhd v Probina Projek Sdn Bhd and another case [2021] MLJU 2009 and Damai City Sdn Bhd v MCC Overseas (M) Sdn Bhd and other cases [2022] MLJU 1951, to name a few (see too, Construction Adjudication In Malaysia, Third Edition, Sweet & Maxwell, 2022 by Lam Wai Loon and Ivan YF Loo at pp 483 - 487). [31] Merah Bayu contended that it has raised issues pertaining to clear and unequivocal errors in the AD in its AIS and AIR. [32] O. 69A, r. 2(1) of the Rules of Court 2012 (‘RC 2012’) provides that an application must be made by O.S. in Form 5 which shall, among others, state the grounds in support of the O.S. [33] O. 69A, r. 4(1) RC 2012 then reads: “4. Application to stay an adjudication decision. (O.69A, r.4)

An application for a stay of an adjudication decision under section 16 of the Act must be supported by an affidavit which must -

have exhibited to it a copy of the adjudication decision and any other document relied on by the applicant;

show that an application to set aside the adjudication decision under section 15 has been made or the subject matter of the adjudication decision is pending determination by arbitration or the Court;

state the grounds on which it is contended that the adjudication decision should be stayed; and (d set out the evidence relied on by the applicant. …”. [34] The requirements under the above said provisions of the RC 2012 are mandatory and a party is not entitled to rely on grounds which are not mentioned in its O.S. and affidavits (see MKP Builders Sdn Bhd v PC Geotechnic Sdn Bhd [2021] 1 LNS 921). [35] Thus, Merah Bayu’s AIS must state the grounds on which it is contended that the AD should be stayed in the O.S. and the AIS. [36] I have scrutinised the O.S. and AIS and I find that the grounds affirmed by Merah Bayu are as mentioned in paragraphs 22 and 23 above. Nowehere has Merah Bayu stated or averred that there are clear and unequivocal errors by the Adjudicator in the AD. Hence, Merah Bayu cannot raise any arguments pertaining to clear and unequivocal errors in its Written Submissions. [37] Merah Bayu has also not mentioned in its O.S. and AIS as to why it is in the interest of justice to stay the AD. In any event, the affirmations in the AIS do not come anywhere close in establishing that it is in the interest of justice to stay the AD. [38] Moreover, as submitted by Mr. Deepak, if the Stay Application is allowed, TKE would continue to be deprived of the sums awarded to it in the AD and this would defeat the purpose of the CIPAA which is to ensure that parties in the construction industry are paid swiftly for works done to avoid cashflow issues (see ACFM Engineering & Construction Sdn Bhd v Esstar Vision Sdn Bhd & Another Appeal [2016] 1 LNS 1522). [39] As Merah Bayu has failed to show any clear and unequivocal errors in the AD or that it is in the interest of justice to allow the Stay Application, it is inevitable that the Stay Application must be dismissed. II. The Enforcement Application [40] TKE’s application was made pursuant to s 28 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.”. [41] In resisting the Enforcement Application, Merah Bayu averred that the Adjudicator had acted in excess of his jurisdiction and the AD is defective. Merah Bayu then contended that the AD ought to be set aside (see paragraphs 8 - 15 of its AIR). In paragraphs 48 and 49 of the Written Submission, Merah Bayu acknowledged that these contentions are in essence arguments under s 15 CIPAA to set aside and adjudication decision and that it has not made any application pursuant to s 15 CIPAA. [42] It is well-established that a party who is resisting or opposing an enforcement application under s 28 CIPAA is not entitled to raise any of the grounds under s 15 CIPAA without filing a corresponding application under s 15 CIPAA (see Inai Kiara Sdn Bhd v Puteri Nusantara Sdn Bhd [2019] 2 MLJ 362). [43] Therefore, Merah Bayu is clearly not entitled to rely on the grounds in s 15 CIPAA in opposing the Enforcement Application without filing a corresponding setting aside application under s 15 CIPAA. [44] As regards to the issue on whether TKE has satisfied all conditions to enforce the AD, this is a resounding “Yes”. [45] An adjudication decision must be enforced if the applicant satisfies the High Court that there is an adjudication decision that has been rendered in the applicant’s favour; there has been non-payment of the adjudicated sum by the date specified in the adjudication decision; and there is no prohibition to the grant of the order that is sought [see Inai Kiara (supra)]. [46] It is incontrovertible that TKE has satisfied all the conditions as above mentioned and the Enforcement Application must be decided in its favour. Conclusion [47] Premised on all the above said considerations, the Stay Application was dismissed and the Enforcement Application was allowed. [48] Taking into account of Merah Bayu’s late filing of encl. 13 and without leave of the Court, Mr. Deepak prayed for costs of RM15,000.00 for the Stay Application and RM7,000.00 for the Enforcement Application. Mr. Thilagan agreed to costs of RM12,000.00 for both applications. [49] In the exercise of my discretion, I ordered Merah Bayu to pay costs of RM10,000.00 for the Stay Application and RM4,000.00 for the Enforcement Application, both subject to allocator. Dated: 22 January 2025 (ALIZA SULAIMAN) Judge High Court in Malaya Kuala Lumpur Counsels/ Solicitors: For the Plaintiff in O.S. No. 129 and for the Defendant in O.S. No. 145: Deepak Mahadevan (Jas Lim Fang Ni with him) Messrs. Azmi Fadzly Maha & Sim Advocates & Solicitors A4-2-5, Solaris Dutamas No. 1, Jalan Dutamas 50480 Kuala Lumpur For the Plaintiff in O.S. No. 145 and for the Defendant in O.S. 129: Thilagan Mehanathan Messrs. Shafee & Co. Advocates & Solicitors Chambers Twenty-Five No. 25, Jalan Tunku Bukit Tunku 50480 Kuala Lumpur