P&A Management Sdn Bhd v WSH Development Sdn Bhd (PA-24C-6-08/2020)

The defendant had contended in its pleadings and written submissions that Interim Payment Certificate No. 23 was not valid as the architect had approved payment for work not done, work done not according to specification and for construction material not sent to the construction site. To support its contention the defendant had provided proof, in particular, the Joint Inspection Report which it claims is 6 evidence of such wrongful certification by the said architect (paragraphs 20, 21, 22, 27 and 28 of the affidavit-in-support).

(ii) The adjudicator had turned down the defendant’s request to make a site visit which it claimed would have enabled the adjudicator to make an assessment by comparing what work was done or not done on the site with the payment that was approved in Interim Payment Certificate No. 23 (paragraphs 23, 24, 25 and 26 of the affidavit-in-support). [8] Based on the above the defendant submitted that the adjudicator had erred in law and fact in deciding that the Interim Payment Certificate No. 23 was in order and valid. Denial of natural justice [9] The starting point would be to determine the meaning of the phrase “denial of natural justice” in section 15(b) of CIPAA. In my opinion the phrase means that an adjudicator in rendering a decision that adversely affects a party in an adjudication proceeding had failed to hear or accord procedural fairness to 7 that party. The rule is so fundamental that justice requires that such decisions are struck down as being null and void as denial of being heard offends the basic right of being accorded a fair hearing. A denial of natural justice would occur when a party to the proceeding is denied a fair opportunity of presenting its case or to correct or contradict the case of the opposing side. It occurs when a defence put up by a party is not considered and where a party is denied an opportunity to make submissions. However, in adjudication proceedings written representations or submissions as opposed to an oral hearing are sufficient to satisfy the rule of natural justice. (see ACFM Engineering & Construction Sdn BHd v Esstar Vision Sdn Bhd and another appeal [2016] 1 LNS 1522 and View Esteem Sdn Bhd v Bina Puri Holdings Bhd [2019] 5 CLJ 479). [10] The second point to observe is that CIPAA is so designed that the adjudicator’s decision is merely interim in nature or of ‘temporary finality’ only. The purpose of CIPAA is to provide a speedy dispute resolution through adjudication so as to ensure that contractors and/or sub-contractors are not deprived of cash flow which is the life-blood of the construction industry (per Zawawi FCJ in Martego Sdn Bhd v Artitek Meor & Chew Sdn 8 Bhd and another appeal [2019] 5 AMR 516. CIPAA does not provide the aggrieved party a right of appeal. The High Court is, therefore not permitted to exercise appellate powers to review the adjudicator’s decision on its merits. To succeed, the aggrieved party must satisfy the court that one of the grounds stipulated in section 15 of CIPAA is established. Only then is the High Court seised with the power to set aside an adjudication decision. [11] In this regard it was established by the Court of Appeal in ACFM Engineering & Construction Sdn BHd v Esstar Vision Sdn Bhd and another appeal [2016] 1 LNS 1522 that section 15 of CIPAA cannot be used to look into or review the merits of the case save the manner the adjudicator conducted the proceedings in the following words: [21] ... 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 CIPAA 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 9 to assess and decide on. The court's function is simply to look at the manner at 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. … [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 CIPAA 2012. 10 [12] Most importantly there was no complaint that the defendant was denied its right or was in any way prevented from tendering evidence or make submissions on issues raised in the adjudication. A perusal of the adjudication decision reveals that the adjudicator had clearly considered the defendant’s case, evidence and submissions meticulously and in great detail. There were seven broad issues listed and determined by the adjudicator in the adjudication decision – three of which are relevant to the instant originating summons (see paragraphs 5.4,

5.5 and 5.6 of the adjudication decision). The three relevant issues are:

whether a project site visit ought to be conducted;

(ii) whether the claimant is entitled to the sum of RM3,093,610.84 which the claimant says is the balance certified but unpaid sum; and

(iii) if the claimant is entitled to the sum sought or any part thereof, whether the matters raised by the respondent in 11 this adjudication would disentitle the claimant from being paid the said sum. Whether the non-making of a site visit is a denial of natural justice [13] The adjudicator had considered the request for a site visit made to him by the defendant and he had informed the parties that if during the drafting of the adjudication decision he is of the view that there is a need to conduct a site visit he would notify the parties accordingly. In the adjudication decision the adjudicator stated that a site visit was not required and gave reasons for so holding (paragraphs 6.21 of the adjudication decision). The adjudicator is perfectly entitled to take this course as section 12(1) read with section 25(a) of CIPAA confers on him the power to establish the procedures in conducting the adjudication proceedings. [14] Section 25 of CIPAA provides the powers of the adjudicator in an adjudication. Pargraph (h) of the section provides as one of the powers in the following words: 12 carry out inspection of the site, work, material or goods relating to the dispute including opening up any work done; [15] The power provided in paragraph (h) of section 25 of CIPAA is a discretionary power and is to be exercised if and when the adjudicator is of the opinion that a site visit is necessary to assist him in making his determination. In this regard it was held in Enra Engineering and Fabrication Sdn Bhd v Gemula Sdn Bhd and another case [2019] 10 CLJ 333 that the court should be slow in disturbing the exercise of such discretionary power in the following words: [37] Whether or not the adjudicator should avail himself of any of the vast powers conferred on him in s. 25 of the CIPAA is a matter best left to the adjudicator in the exercise of his discretion and the court would generally abstain from interfering or intervening in an application to set aside an adjudication decision. [38] He may exercise any of the powers given on him from s. 25(a) to (p) either alone or in combination with 13 other powers. It is not mandatory for the adjudicator to exercise all of his powers provided under s. 25 of the CIPAA. Pursuant to s. 12(1) of the CIPAA, the adjudicator shall conduct the adjudication in the manner as the adjudicator considers appropriate within the powers provided under s. 25. [16] The adjudicator has from his detailed and comprehensive judgment considered the reasons of the parties for and against the site visit and arrived at his reasons as to why the site visit was not necessary. The adjudicator was of the view that the dispute could be determined purely based on the documentary evidence submitted by the parties. In any event the failure to make a site visit is but part of the real complaint of the defendant – that Interim Payment Certificate No. 23 in respect of which the adjudication sum was based is invalid. Interim Payment Certificate No. 23 [17] The defendant claimed that the adjudicator erred in law and in fact in deciding that Interim Payment Certificate No. 23 was valid which resulted in the adjudication sum being awarded. 14 It was contended that the finding by the adjudicator that Interim Payment Certificate No. 23 was valid was against the weight of evidence. It is clear that the issue raised by the defendant concerns sufficiency of evidence which in turn goes directly into the merits of the adjudication decision and therefore not a ground to set aside an adjudication decision under section 15(b) of CIPAA. [18] To recap, there was no complaint by the defendant that it was prevented from tendering evidence or from making submission on issues raised in the adjudication. On the other hand the complaint against the finding of the adjudicator is related substantially to the manner in which the adjudicator arrived at his decision after evaluating the evidence provided to him. I perused the adjudication decision and found that the adjudicator had asked himself the right questions and had correctly considered and analysed the evidence. As such, the appellant’s contention that the adjudicator had committed breach of natural justice cannot be sustained and the invoking of section 15(b) of CIPAA is an abuse of the process of the court. The defendant’s originating summons is therefore dismissed. 15 First originating summons [19] I now revert to the plaintiff’s originating summons. All the plaintiff needs to do is to satisfy this 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. Once these matters are established as matters of fact, the order to enforce ought to be granted. [20] There is no dispute that an adjudication decision that has been rendered in the applicant’s favour and that the defendant has not paid the adjudication sum within the period stipulated in the adjudication decision. By the dismissal of the application to set aside there is also not prohibition to grant the order sought. The plaintiff’s originating summons was therefore allowed. …………………Sgd…………………… Amarjeet Singh Serjit Singh Judicial Commissioner High Court of Penang Dated: 4th July 2021 16 Counsel for the Applicant: James Tse Wen [C H TAY & PARTNERS (KUALA LUMPUR)] Counsel for The Respondent: Zaiyanazareth Binti Zaini [ZAIYANAZARETH & ASSOCIATES(SHAH ALAM)] Cases Referred to:

ACFM Engineering & Construction Sdn BHd v Esstar Vision Sdn Bhd and another appeal [2016] 1 LNS 1522 2. View Esteem Sdn Bhd v Bina Puri Holdings Bhd [2019] 5 CLJ 479 3. Martego Sdn Bhd v Artitek Meor & Chew Sdn Bhd and another appeal [2019] 5 AMR 516.

ACFM Engineering & Construction Sdn BHd v Esstar Vision Sdn Bhd and another appeal [2016] 1 LNS 1522 5. Enra Engineering and Fabrication Sdn Bhd v Gemula Sdn Bhd and another case [2019] 10 CLJ 333