Okg (Malaysia) Sdn. Bhd. v Goodwinds Interior Design Sdn. Bhd. (WA-24C-26-02/2024)

OKG (Malaysia) Sdn Bhd (“OKG”) has under enclosure 1 of Originating Summons No. WA-24C-26-02/2024 (OS 26) made an application under section 15(c) and (d) and section 16 of the Construction Industry Payment and Adjudication Act 2012 (“CIPAA”) for the Adjudication Decision dated 29.1.204 (AD) to be both set aside (Setting Aside Application) and stayed pending the disposal of the Setting Aside Application (Stay Application).

Originating Summons No. WA-24C-44-03/2024 (OS 44) is inter alia Goodwinds Project Solutions Sdn Bhd (“Goodwinds”) application to enforce the AD under section 28 of CIPAA.

In support of OS 26, OKG had submitted that the Adjudicator had acted in excess of his jurisdiction when inter alia he had decided that

3.1 the Contract was a legitimate construction contract and that Goodwinds was able to rely on the illegal act to advance its claim although they are not registered with the Lembaga

3.2 there is no breach of the Architects Act 1967 by Goodwinds

3.3 Goodwinds can render scope of services prohibited by the

3.4 The Cost Proposal dated 9.3.2023 is not illegal

3.5 The presentation material and representation as well as the company profile and proposal made by Goodwinds was true and genuine and did not violate section 27 A & E of the Architects Act 1967 nor contained any misrepresentations [4] In essence OKG had submitted that the maxim ‘Ex Turpi Causa Non Oritur Action’ i.e ‘from an unlawful cause no action can arise’ was applicable based on the above contentions. [5] OKG had also submitted that the Adjudicator had not acted independently or impartially by drawing on his ow findings and failed to consider the evidence and documents produced by OKG. Brief Background Facts [6] By way of a Cost Proposal bearing reference no. 018-GID-23-007 dated 9.3.2023 (“Cost Proposal”) prepared by Goodwinds which was accepted and approved by the OKG on 10.3.2023, the parties entered a contract wherein Goodwinds is obligated to carry out the construction works known as the Proposed Interior Design and Fit Out Works for HK Restaurant at Plaza Mont Kiara (“the Works”) for OKG (“contract”). [7] At all material times, Goodwinds had carried out and completed the scope of works as stated in the Cost Proposal for the project pursuant to the terms and conditions of the contract. [8] Goodwinds had carried out and completed the Works including the variation works based on the terms and conditions of the Contract and submitted its invoices to OKG. However, OKG in breach of its obligations failed to make payment to Goodwinds for the work done and to issue the Certificate of Practical Completion despite the completion of the works. [9] On 1.9.2023, Goodwinds issued a Payment Claim dated 1.9.2023

9.1 RM202,114.00 for work done;

9.2 RM91,490.00 being the amount due and owing for variation works carried out; and 9.3 Interest, on the sum of RM293,604.00 from the due date of payment until full realization. [10] The Adjudication Decision was issued on 29.1.2024 which was in favour of Goodwinds as follows: “M. Determination

Having carefully considered the evidence and arguments submitted to me in this adjudication proceeding, based on the reason stated above, I accordingly FIND, DECLARE, HOLD, DETERMINE AND AWARD as follows:

94.1 That the Respondent’s Issues for Preliminary Determination is dismissed;

94.2 Respondent shall pay to the Claimant the Adjudicated Sum of RM208,926.00;

94.3 Respondent’s crossclaim or set-off for the back charges for the amount of RM312,495.00 and its entitlement to recover the 40% deposit paid or any part thereof is dismissed;

94.4 That the Respondent shall also pay the Claimant late payment interest:- 7 94.4.1on the sum of RM140,376.00 at the rate of 5% per annum from the due date of 9.6.2023 until the Due Date for Payment; and 94.4.2 on the sum of RM68,550.00 at the rate of 5% per annum from the due date of 9.6.2023 until the Due Date for Payment.

94.5 Respondent shall pay to the Claimant the Adjudication Costs of RM43,732.49;

94.6 The Adjudicated Sum together with the late payment interest and Adjudication Costs, shall be paid by the Respondent to the Claimant on or before 20th February 2024 (“Due Date for Payment”);

94.7 In the event of default by the Respondent, a further interest of 5% per annum shall be payable by the Respondent until the payment of the said sum is fully settled by the Respondent.” Excess Of Jurisdiction [11] With respect, I have considered the submissions of both sides and will firstly deal with the alleged excess of the Adjudicator’s jurisdiction. [12] My starting point on this issue was to look at section 27A of the Architects Act 1967 which reads “section 27A of the Architects Act 1967 No person shall, unless he is an Interior Designer-

practise or carry on business as an Interior Designer;

be entitled to describe himself or hold himself out under any name, style or title-

bearing the words 'Interior Designer' or the equivalent thereto in any language; or

(ii) bearing any other word whatsoever in any language which may reasonably be construed to imply that he is an Interior Designer;

use or display any sign, board, card or other device representing or implying that he is an Interior Designer; or

be entitled to recover in any court any fee, charge, remuneration or other form of consideration for any advice or services rendered as an Interior Designer.” [13] I have after perusing the words in the said sections and the Architects Act 1967 as a whole found that there is no legislative definition of the term ‘interior design works’ save that under section 2 of the Architects Act 1957 an "Interior Designer" was defined to mean a person registered under Part VA. [14] Section 2 of the Architects (Amendment) Act 2015, which came into force on 1.6.2015, however now contains a definition for ‘interior design consultancy services’ and the same provides

by inserting after the definition of "Interior Designer" the following definitions: "interior design consultancy practice" means a sole proprietorship, partnership or body corporate incorporated under the Companies act1965 [act 125] , providing interior design consultancy services and is registered by the Board under section 27E; "interior design consultancy services" in relation to interior design works means those services provided in paragraph 27E(1) (b);” [15] Thus, by virtue of the Architects (Amendment) Act 2015, the amended section 27E(1)(b) therefore now reads Section 27E of the principal act is amended-

by substituting for subsection (1) the following subsection: "(1) An Interior Designer shall not, unless registered with the Board as a sole proprietorship, a partnership or a body corporate and has been issued a certificate of registration-

recover in any court any fee, charge, remuneration or other form of consideration for interior design consultancy services rendered as an interior design consultancy practice; and

provide interior design consultancy services for interior works involving any but without prejudice to the generality of the following:

consultation, advice, direction, evaluation, budgetary estimate and appraisal;

(ii) schematic interior design plans, design development and project programming;

(iii) preparation of contract documents including working drawings, construction details and technical specifications;

(iv) contract administration, supervision and certification of payment and progress of works; and

any other activities relating to the creation, preservation and enhancement of the interior environment including the following:

(A) any changes on the building structure;

(B) any changes to an existing building layout;

(C) building or statutory codes; and

(D) health and safety issues."; [16] My reading of the above sections indicate that prima facie section 27E(1)(b) and in particular sub section (v) (A) to (D) thereto is to be read cummulatively with the preceding sub sections as there is the word ‘and’ immediately after the words in sub section (iv) thereto. This would mean in my considered opinion that ‘interior design works’ must include the interior design consultancy services for interior works as prescribed in section 27E (1)(b) (i) to (iv) as well as the other activities relating to the creation, preservation and enhancement of the interior environment as mentioned in (v) (A) to (D) thereto. [17] I have also looked at the AD to see how the Adjudicator had dealt with this issue and find that the Adjudicator had after carefully considering all the relevant submission and documents with particular regards to amongst others the Cost Proposal in relation to the Works to be provided, the Architect’s Act 1967, and the Detailed Cost Breakdown, found no merit in the jurisdictional challenge as his findings indicate that Goodwinds. “..had a defined scope of carrying out construction works and not for interior design works” and that “…there is no evidence…that the Respondent’s appointment of the Claimant was premised on the need for the Claimant to provide interior design works as defined by the Architect’s Act 1967” and that Goodwinds was “… in fact a general contractor who deals in interior decorators..” [18] I hold in the circumstances that the challenge as to the Adjudicators decision herein is one which actually goes to the merits of his findings and that this Court cannot intervene in such findings so long as the Adjudicator had asked himself the right question. The fact that his answer to the correct question which the Adjudicator had asked himself was wrong in fact or law cannot be a ground to challenge the Adjudicator’s decision on this point. I reiterate that it is trite law that section 15 of CIPAA is not meant to be treated as an appeal to the Adjudicator’s findings, see the Court of Appeal in ACFM Engineering & Construction Sdn Bhd v Esstar Vision Sdn Bhd (and anor appeal) [2016] MLJU 1776. Allegation of Adjudicator Not Acting Independently Or Impartially [19] This Court will now address the allegation of the Adjudicator not acting independently or impartially. [20] In essence OKG had submitted that the Adjudicator was not acting independently or impartially to which I may surmise is inter alia 20.1 due to the alleged illegality of the Contract, where the Adjudicator should have determined the recovery of the 40% deposit paid to Goodwinds 12 20.2 there is a dispute as to the completed scope of works 20.3 there were false representations made by Goodwinds in regards to its engagement [21] I have after reading the AD in toto, find that the Adjudicator did consider all the matters, arguments, submissions, ‘pleadings’ and evidence before coming to his decision on the alleged illegality of the Contract, dispute as to the completed scope of works and the alleged false representations made by Goodwinds in regards to its engagement. [22] With regards the alleged illegality of the Contract and the alleged false representations made by Goodwinds, the Adjudicator had therefore held, as mentioned after due consideration of the matter before him as stated above, inter alia that Goodwinds a. was “..a general contractor and deals in interior decorators” b. “had carried out and completed the works pursuant to the terms and conditions of the Cost Proposal as well as the variation works” c. “No where does the Cost Proposal provide for interior design works to be done” d. A “Design Fee’ of RM5,000 that has been included in the Preliminaries is not for interior design works, as it is for preparatory works leading to the performance of the construction contract.” e. “…there is no evidence before me that the Respondent’s appointment of the Claimant was premised on the need for the Claimant to provide interior design works as defined by the Architect’s Act 1967” f. “…it does not appear that the Respondent had raised the issue of illegality with regards to the contract…at any point prior to raising the same in its Adjudication Response, particularly when the parties negotiated and entered into the Contract, during performance of the Contract and also after the completion of the Works..” g. “A scrutiny of the Cost Proposal and the papers in this adjudication …show that the current claims before me relates to the construction works carried out by the Claimant …and not for interior design fees..” [23] As to the works done i.e the dispute as to the completed scope of works, I find that the Adjudicator did address and consider this issue and concluded thereafter after a careful review of the evidence and documents submitted amongst others a. “..the Respondent did not provide sufficient evidence or explanation to substantiate the contentions of violations regarding statutory approvals…” b. “…Respondent’s business had been operating since 15.5.2023..The ongoing operation of the restaurant raises over the impact of the alleged breaches which the Respondent is required to prove.” [24] Thus, as to these allegations I find that there is nothing tenable in OKG’s challenge on this point as it would appear that all their arguments on this issue was due to the said Adjudicator rejecting OKG’s evidence and arguments and I adopt and refer to the judgment of Lee Swee Seng J (as he then was ) in Teguh Wiramas Sdn Bhd v Thien Seng Chan Sdn Bhd And Another Application [2017] MLJU 633 where His Lordship had stated “[39] There is also no basis for the Respondent to allege that the Adjudicator had failed to act independently and impartially. The fact that the Adjudicator did not agree with the Respondent’s position on the law is no proof that he had failed to act independently and impartially. Such an allegation should not be launched without some evidence pointing inexorably to a lack of independence or impartiality in the hearing and the delivery of the Adjudication Decision.” Decision for Setting Aside [25] Based on my aforesaid reasons, I find no merit in the Setting Aside Application and I hereby dismiss enclosure 1 in OS 26 with costs. Stay of Execution [26] The Stay Application in OS 26 is therefore now academic and is dismissed. Enforcement Application [27] As there are no longer any impediments as to the enforcement of the AD, I hereby grant Order In Terms of prayers 1, 2 (a) to (g) and prayer 3. Dated: 17th day of September 2024 sgd. NADZARIN WOK NORDIN HIGH COURT JUDGE CONSTRUCTION COURT 1 COUNSEL FOR THE PLAINTIFF (OS 26)/ DEFENDANT (OS 44): Phan Yit Leng (Messrs Leaw & Phan] COUNSEL FOR THE DEFENDANT (OS 26)/ PLAINTIFF (OS 44): Rodney Gan and Inshirah Binti Mohd Amim (Messrs Sanjay Mohan]