Panzana Enterprise Sdn Bhd v Mkp Builders Sdn Bhd (WA-24C-42-02/2020)

These are applications for pay-out of monies in a stakeholding account held by solicitors pursuant to pay-in as ordered by the court consequential to an adjudication decision made under the Construction Industry Payment and Adjudication Act 2012 (“CIPAA”).

The parties concerned, to wit, Panzana Enterprise Sdn Bhd (“Panzana”), MKP Builder Sdn Bhd (“MKPB”) and PC Geotechnic Sdn Bhd (“PCG”) are all private limited companies involved in the construction business.

By a letter of award dated 20 January 2017 ("Contract"), Panzana appointed MKPB as its subcontractor to carry out and complete the piling works and substructure works ("Works") for the construction and completion of mainline and other associated works from Ch 4983 to Ch 9307 - elevated structures and ramps for the project described as the "Projek Penswastaan Lebuhraya Bertingkat Damansara-Shah Alam (DASH)" ("Project"). The employer of the Project is Turnpike Synergy Sdn Bhd. 3

There were disputes and differences that arose between Panzana and MKPB in the course of the carrying out of the Works under the Contract including the termination of the Contract.

As the result, Panzana on 26 July 2019 commenced KL High Court Civil Suit No. WA-22NCC-421-07/2019 ("Suit") against the MKPB in relation to the disputes and differences. The Suit is presently ongoing.

Nevertheless, MKPB on 18 October 2019 initiated adjudication proceedings against Panzana under the CIPAA to claim for its unpaid work done under the Contract.

The adjudicator on 4 February 2020 made his adjudication decision (and which was amended on 13 February 2020) in favour of MKPB. He held that Panzana’s termination of the Contract was unlawful and ordered Panzana to pay MKPB the sum of RM17,475,017.31 together with interest and costs.

In consequence, Panzana on 11 February 2020 initiated an application to stay the adjudication decision pending the disposal of the Suit pursuant to s. 16 of the CIPAA. 4

On 12 March 2020, I granted a conditional stay order ("Stay Decision") in favour of Panzana in the following terms:

the sum of RM6,840,610.01 owing by MKPB to B Cor Geotechnics Sdn Bhd and RM170,738.49 owing by the MKPB to Hong Jing Services Sdn Bhd shall be paid by Panzana to MKPB on or before April 13, 2020 and MKPB shall pay the said sums forthwith to B Cor Geotechnics Sdn Bhd and Hong Jing Services Sdn Bhd respectively;

(ii) the balance adjudicated sum of RM11,474,801.90 shall be paid by two equal instalments on or before June 11, 2020 and September 1, 2020 respectively into an interest-bearing stakeholder's account jointly held by Panzana’s solicitors and MKPB's solicitors;

(iii) liberty to apply is given in the event P C Geotechnics Sdn Bhd makes a s. CIPAA application against Panzana;

(iv) RM5,000.00 costs subject to 4% allocator; and

if there is default in either paragraph (i) or (ii) above, the stay is automatically revoked. The grounds of the Stay Decision have now been reported in [2020] 5 AMR 72. [10] By virtue of the implementation of the Movement Control Order in March 2020 followed by the Conditional/Recovery Movement Control Orders respectively by the Government of Malaysia pursuant to the 5 Prevention and Control of Infectious Diseases Act 1988, Panzana seemingly faced financial hardship complying with the Stay Decision. [11] As the result, Panzana on 3 June 2020 applied for an extension of time to comply with paragraph (ii) of the Stay Decision. [12] In consequence, both Panzana and MKPB on 4 August 2020 entered into the following consent order: PERINTAH PERSETUJUAN ATAS PERMOHONAN Plaintif yang ditetapkan untuk mediasi hari ini DAN SETELAH MEMBACA Notis Permohonan bertarikh 3.6.2020 (Lampiran 59) dan Afidavit-Afidavit yang kesemuanya difailkan di sini DAN SETELAH MENDENGAR Darshendev Singh (Vincent Ong Liang Jie bersamanya), peguam bagi pihak Plaintif, Tang Kim Choong, peguam bagi pihak Defendan, Zini Rizal bin Hashim, wakil Plaintif dan Yong Kok Yeap, wakil Defendan MAKA ADALAH DENGAN PERSETUJUAN DIPERINTAHKAN bahawa: a) Tarikh akhir (deadline 11.6.2020, yang dirujuk di dalam perenggan (ii) ("Terma 2") perintah Mahkamah Yang Mulia ini bertarikh 12.3.2020 ("Perintah 12.3.2020") untuk Plaintif membayar jumlah ansuran pertama RM5,737,403.95 menurut Terma 2 Perintah 12.3.2020, dilanjutkan sehingga 17.8.2020; b) Tarikh akhir (deadline) 1.9.2020, yang dirujuk di dalam Terma 2 Perintah 12.32020 untuk Plaintif membayar baki jumlah RM5,737,403.95 menurut Terma 2 Perintah 12.3.2020, dilanjutkan sehingga 15.10.2020; 6 c) Sekiranya Plaintif memungkiri terma-terma di dalam perenggan (a) dan (b) di atas, perintah penggantungan yang diberikan di dalam Perintah 12.3.2020 adalah dibatalkan secara automatik; dan d) Tiada perintah berkenaan kos Bertarikh pada 4 haribulan Ogos, 2020 ILLI MARISQA BINTI KHALIZAN Penolong Kanan Pendaftar Mahkamah Tinggi Malaya Kuala Lumpur ("Amended Stay Decision") [13] However, Panzana thereafter still seemingly faced financial hardship in complying with the Amended Stay Decision and thus on 15 October 2020 applied primarily for further extension of time to comply with the Amended Stay Decision ("EOT Application") to make the final payment of RM5,737,403.95 pursuant to paragraph (b) of the Amended Stay Decision by 15 December 2020. [14] In the meanwhile, PCG on 19 June 2020 initiated KLHC Originating Summons no. WA-24C-128-06/2020 against Panzana seeking for direct payment from principal pursuant to s. 30 of the CIPAA ("Direct Payment Application"). [15] Additionally, MKPB on 16 October 2020 also initiated its enforcement application under the CIPAA (“Enforcement Application”). 7 [16] The PCG’s Direct Payment Application came before me for hearing on 1 December 2020 and I allowed the same subject to the amount of direct payment limited to RM5,737,403.95 with costs of RM8,000.00 subject to the standard allocator (“Direct Payment Decision”). The grounds of the Direct Payment Decision have now been reported in [2020] 1 LNS 2171. [17] Subsequently, the EOT Application and the Enforcement Application came before me for hearing on 9 December 2020. I dismissed the EOT Application with costs of RM7,500.00 subject to 4% allocator and I thereafter allowed the Enforcement Application with costs of RM4,000.00 subject to 4% allocator (collectively “Decisions”). The grounds of the Decisions have now been reported in [2021] 1 LNS 291. [18] Consequently, PCG on 2 February 2021 made its application to claim the money still deposited in the stakeholding account held by Panzana’s solicitors pursuant to the Amended Stay Decision (“PCG Application”). [19] The affidavits which were filed pursuant to the PCG Application are as follows:

PCG’s affidavit in support affirmed by Wong Tien Yong dated 2 February 2021; 8

(ii) MKPB’s affidavit in reply affirmed by Yong Kok Yeap dated 19 February 2021;

(iii) Panzana’s affidavit in reply affirmed by Ahmad Arifin bin Kasah dated 24 February 2021;

(iv) PCG’s affidavit in reply affirmed by Asfarina Shafiza binti Aziz dated 1 April 2021;

MKPB’s affidavit in reply (2) affirmed by Yong Kok Yeap dated 6

(vi) PCG’s affidavit in reply affirmed by Wong Tien Yong dated 12 April 2021; and

(vii) MKPB’s affidavit in reply (3) affirmed by Yong Kok Yeap dated 13 April 2021. [20] MKPB thereafter on 8 February 2021 likewise made its application to claim for the money still deposited in the stakeholding account held by Panzana’s solicitors pursuant to the Amended Stay Decision (“MKPB Application”). [21] The affidavits which were filed pursuant to the MKPB Application are as follows:

MKPB’s affidavit in support affirmed by Yong Kok Yeap dated 19 February 2021; 9

(ii) Panzana’s affidavit in reply affirmed by Ahmad Arifin bin Kasah dated 12 March 2020;

(iii) PCG’s affidavit in reply affirmed by Asfarina Shafiza binti Aziz dated 1 April 2021; and

(iv) MKPB’s notice of intention to use affidavits dated 14 April 2021. [22] Finally, Panzana on 3 March 2021 also made its application to claim for the money still deposited in the stakeholding account held by Panzana’s solicitors pursuant to the Amended Stay Decision (“Panzana Application”). [23] The affidavits which were filed for purposes of the Panzana Application are as follows:

Panzana’s affidavit in support affirmed by Ahmad Arifin bin Kasah dated 3 March 2021;

(ii) MKPB’s affidavit in reply affirmed by Yong Kok Yeap dated 18 March 2021;

(iii) PCG’s affidavit in reply affirmed by Asfarina Shafiza binti Aziz dated 1 April 2021; and

(iv) Panzana’s affidavits in reply affirmed by Ahmad Arifin bin Kasah dated 12 April 2021; 10 [24] All the three aforementioned applications came before me for hearing together via Skype on 29 June 2021. After having read the written submissions filed by the parties and oral arguments of counsel, I firstly disallowed Panzana’s Application with no order as to costs. [25] PCG thereafter applied to withdraw the PCG Application with liberty to institute garnishment proceedings against Panzana’s solicitors which holds the stakeholding money. Accordingly, I struck off the PCG Application and directed PCG to institute its intended garnishment proceedings by 13 July 2021 including service of the same on MKPB. [26] Finally, I allowed MKPB Application to the extent that I declare the money presently held by Panzana’s solicitors, Messrs. Hakem Arabi and Associates belong to MKPB. However the pay-out of the money is stayed until and subject to the decision of the intended garnishment proceedings to be instituted by PCG. No order as to costs. [27] Panzana is dissatisfied with my decision in disallowing the Panzana Application and has on 26 July 2021 filed its appeal to the court of appeal. [28] In the premises, I furnish below the grounds in support of my aforementioned decisions. 11 Contentions and Findings [29] Panzana primarily contended that since the Amended Stay Decision had automatically lapsed by the denial of its EOT Application, the remaining money held by Panzana’s solicitors as stakeholder ought to be returned to Panzana since it was paid-in by Panzana. [30] Furthermore, Panzana contended that MKPB is disentitled to the money because it owed Panzana the money that was paid to B Cor Geotechnics Sdn Bhd (“BCG”) as the result of the Stay Decision. On appeal against the Stay Decision, Panzana and BCG entered into a settlement agreement with BCG that the money received by BCG would be refunded to Panzana. Since BCG has gone into liquidation and is hence unable to refund the money, Panzana is therefore entitled instead to be refunded from the money held by Panzana’s solicitors as stakeholder. [31] Panzana also contended that PCG is disentitled to the money because it has already on 1 December 2020 obtained a direct payment order against Panzana pursuant to s. 30 of the CIPAA and should accordingly be paid ultimately if the court of appeal affirms the direct payment order. [32] MKPB denied Panzana’s contentions and counter-contended that it is entitled to the money held by Panzana’s solicitors as stakeholder because the money was paid-in by Panzana in satisfaction of the 12 adjudication decision made in favour of MKPB. Consequently, the money belonged to MPKB when the Amended Stay Decision lapsed. [33] Likewise PCG denied Panzana’s contentions and counter-contended that it is entitled to the money because PCG has on 18 August 2020 obtained an enforcement order against MKPB pursuant to s. 28 of the CIPAA from the Shah Alam High Court. To date, PCG has not been paid by MKPB. [34] These aforementioned applications are, in my view, an interpleader type application under Order 17 of the Rules of Court 2012 albeit it is not strictly one because Panzana’s solicitor, Messrs. Hakem Arabi and Associates did not make any application. [35] Nonetheless, the principles on interpleader are gainful. In Tetuan Teh Kim Teh, Salina & Co v Tan Kau Tiah & Anor [2013] 5 CLJ 161 FC, Ahmad Maarop FCJ (later PCA) held as follows in respect of interpleader proceedings: “[34] Order 17 r. 1(a) of the RHC is the provision for what is known as stakeholder's interpleader. Under this provision a person who holds any money, goods or chattels which he does not claim, or is under liability for a debt and he expects to be sued in respect of that money, goods or chattels by two or more persons, that person can protect himself from an action and the costs of such an action by calling on these claimants to interplead, in other words, to claim against one another, so that the court can decide to whom the money, goods or chattels belong. (Mallal's Supreme Court Practice, 2nd edn, vol. 1, 1983). The nature of an interpleader is lucidly explained in De La Rue v. Hernu, Peron & Stockwell, Ltd. De La Rue, claimant [1936] 2 All ER 411 (referred to by this court in Chin Leong Soon & Ors v. Len Chee Omnibus Co Ltd & Anor [1969] 1 LNS 28; [1970] 2 MLJ 228. See also Glencore International AG v. 13 Shell International Trading and Shipping Co Ltd and another [1999] 2 All E.R (Comm) 922)… … [35] In a separate judgment, Greene LJ said: What, in substance, all along, both under the old equitable procedure and under the modern procedure, is being decided, is claims by two claimants against the person interpleading. What really happens is that whereas there are two claimants who are harassing a person desirous of interpleading, that person is interpleading by the interpleader proceedings calling upon the claimants to come out into the open and formulate their claims against him. In substance, when an interpleader issue is tried, two actions against the person interpleading are being dealt with, and interpleader proceedings is the method of compelling the parties-either one, or both, or neither of whom may have actually issued a writ-to prosecute their claims. As it is the essence of interpleader proceedings that the person who has interpleaded has no title himself he naturally drops out of the suit. But in effect the entire matter is tried out in the presence of all the parties concerned, and the real claimants are compelled to put forwards their claims and have them adjudicated upon. The reason for that is not their own benefit, it is for the relief of the person interpleading. When it is once appreciated that is the true nature and history of interpleader proceedings, I take the view that it is quite wrong to treat an issue directed under the interpleader rules as though it were an action of tort. It is a method to enable the court to decide the claims between two persons present at the proceedings, and to decide those claims so that the person interpleading will get the relief to which he is entitled.” (emphasis added) [36] The object of these aforementioned applications is plainly to determine who amongst the three applicants is entitled to the money held by Panzana’s solicitors as stakeholder; hence to get the relief in the money which the proper party is entitled. 14 [37] I have carefully examined the parties contentions particularly between Panzana and MKPB and I am satisfied that the money held by Panzana’s solicitors after the Amended Stay Decision lapsed belong to MKPB. This is because MKPB has a binding adjudication decision against Panzana as made clear by s. 13 of the CIPAA which provides:

Effect of adjudication decision 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. Furthermore at the material time, MKPB’s Enforcement Order has been in force too. [38] The money was paid to Panzana’s solicitors as stakeholder pursuant to the Amended Stay Decision as security for MKPB’s adjudication decision pending final determination in the Suit which is still ongoing todate. [39] However, Panzana breached the Amended Stay Decision which resulted in the stay automatically lapsing and I thus find that Panzana cannot in the circumstances take advantage or benefit of its own wrong by claiming for the money held by Panzana’s solicitors as stakeholder. In 15 Su Wee Lip @ Phillip Su v Haji Lassim Abdul Rahman [2009] 1 MLJ 580 FC Gopal Sri Ram JCA (later FCJ) held as follows: “It is a settled principle of general application that a person should not be permitted to take advantage of his own wrong. When applied in the sphere of contract law it expresses itself in the proposition that a guilty party ought not to be permitted to take advantage of his own breach of the contract.” [40] As for PCG’s claim to the money as well, this has to await the intended garnishment proceedings as aforementioned and I make no finding here. 16 Conclusion [41] It is for the foregoing reasons that I made my decisions in paragraphs [24] to [26] above as so ordered. Dated this 30 July 2021 t.t. LIM CHONG FONG JUDGE CONSTRUCTION COURT 1 HIGH COURT KUALA LUMPUR COUNSEL FOR PANZANA: GANESH MAGENTHIRAN SOLICITORS FOR PANZANA: HAKEM ARABI AND ASSOCIATES COUNSEL FOR MKPB: TANG KIM CHOONG (SHAFIEE BIN AFENDI WITH HIM) SOLICITORS FOR MKPB: K.C. TANG & CO COUNSEL FOR PCG: JASON NG KAU (BELL WONG CHIA PEI WITH HIM) SOLICITORS FOR PCG: JASON NG & PARTNERS