Pinnacle Surpreme Sdn Bhd v Dsg Projects Malaysia Sdn Bhd (wa-24c-180-09/2019 dan wa-24c-186-09/2019)

These are cross applications to set aside as well as to enforce an adjudication made pursuant to the Construction Industry Payment and Adjudication Act 2012 (“CIPAA”).

The Plaintiff in Originating Summons no. WA-24C-180-09/2019 (“OS 1”) and the Defendant in Originating Summons no. WA-24C-186- 09/2019 (“OS 2”) is a private limited company involved in the property business.

The Defendant in OS 1 and the Plaintiff in OS 2 is likewise a private limited company involved in the construction business.

For easy referencing, the parties will hereinafter be referred as Pinnacle and DSG respectively. 3

By a letter of award dated 30 August 2017 “(LOA”), Pinnacle appointed DSG to carry out and complete interior modification and building facade works (“Works”) for the Citizen M Hotel in Kuala Lumpur (“Project”).

Besides the LOA, the parties agreed that the PAM Conditions of Contract (2006 edition) (Without Quantities) with modifications and addendum formed the contract between them (“Contract”).

There were disputes and differences that arose under the Contract in respect of the carrying out of the Works.

As a result, DSG on 11 March 2019 served it payment claim under the CIPAA on Pinnacle claiming for the sum of RM15,305,039.34.

Pinnacle on 25 March 2019 served in payment response on DSG denying the claim and raised a minimum set off of RM7,751,000.00.

Consequently, DSG on 3 April 2019 served its notice of adjudication under the CIPAA on Pinnacle. 4

The Director of Asian International Arbitration Centre on 24 April 2019 appointed Ms. Celine Chelladurai as the adjudicator (“Adjudicator”).

The parties duly submitted their adjudication claim, adjudication response and adjudication reply respectively (“Adjudication Submissions”). In addition, Pinnacle took issue with DSG’s adjudication reply which allegedly included amendment to the amounts claimed and adduction of new evidence. Nonetheless, the parties on 17 July 2019 submitted their submissions (“Further Adjudication Submissions”) thereon as requested by the Adjudicator.

The Adjudicator thereafter on 20 August 2019 made her adjudication decision (“Decision”) which ordered Pinnacle to pay the nett sum of RM7,258,573.30 (DSG’s claim allowed of RM9,664121.80 less Pinnacle’s set off/counterclaim allowed of RM2,405,548.50) and adjudicator’s fee of RM44,570.00 to DSG.

Pinnacle is dissatisfied with the Decision and has on 20 September 2019 filed OS 1.

By reason that Pinnacle did not pay DSG as ordered in the Decision, DSG hence on 25 September 2019 filed OS 2.

The affidavits which were filed for purposes of OS 1 are as follows: 5

Pinnacle’s affidavit in support affirmed by Voon Joon Tung dated 20

(ii) DSG’s affidavit in reply affirmed by Nicholas Richard Potts dated 18 October 2019; and

(iii) Pinnacle’s affidavit in reply affirmed by Voon Joon Tung dated 1 November 2019. [17] The affidavits which were filed for purposes of OS 2 are as follows:

DSG’s affidavit in support affirmed by Nicholas Richard Potts dated 25 September 2019;

(ii) Pinnacle’s affidavit in reply affirmed by Voon Joon Tung dated 18 October 2019; and

(iii) DSG’s affidavit in reply affirmed by Nicholas Richard Potts dated 1 November 2019. [18] The hearing of both OS 1 and OS 2 came before me for hearing on 17 September 2020. At the outset, the parties agreed that if OS 1 is refused, then OS 2 would be automatically allowed and vice versa on the flip side. [19] Thus and after having read the written submissions filed by the parties and oral arguments of counsel, I dismissed OS 1 with costs of 6 RM5,000.00 subject to 4% allocator and allowed OS 2 also with costs of RM5,000.00 subject to 4% allocator. [20] Consequently DSG has on 16 October 2020 appealed against both my aforementioned decisions. [21] I accordingly furnish below the grounds of my decisions. Contentions and Findings [22] In OS 1 and notwithstanding that several grounds of challenge were advanced by the Pinnacle in its affidavit in support, Pinnacle has in the hearing basically confined its contentions to two distinct grounds of challenge as set out in its written submissions, to wit, that:

the Adjudicator acted in excess of jurisdiction by deciding in favour of DSG in respect of the retention sum of RM1,875,000.00; and

(ii) the Adjudicator denied Pinnacle natural justice by deciding in favour of DSG in relation to variation orders of RM5,330,169.44. 7 [33] Both contentions have been refuted by DSG. According to DSG, the Adjudicator acted properly within her jurisdiction at all material times. Pinnacle’s contentions are in substance appeals against the merits of the Decision which are not permissible in a setting aside application following Naza Engineering & Construction Sdn Bhd v SSL Dev Sdn Bhd [2020] 9 MLJ 499. [34] The relevant statutory provision is s. 15 of the CIPAA which reads: “15. Setting aside adjudication decision 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.” [35] Generally, it has been made clear by David Wong Dak Wah JCA (later CJSS) as follows in the Court of Appeal case of ACFM Engineering & Construction Sdn Bhd v Esstar Vision Sdn Bhd (and Another Appeal) [2016] MLJU 1776,: “[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 s 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 to assess and decide on. The court's function is simply to look at the manner in which the adjudicator 8 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.” Furthermore in Econpile (M) Sdn Bhd v IRDK Ventures Sdn Bhd & Another Case [2016] 5 CLJ 882, Lee Swee Seng J (now JCA) held as follows: “[13] The principles as to enforcement of adjudicators' decisions are well known. They can be summarised as follows:

"the objective which underlies the Act and the statutory scheme requires the courts to respect and enforce the adjudicator's decision unless it is plain that the question which he has decided was not the question referred to him or the manner in which he has gone about his task is obviously unfair. It should be only in rare circumstances that the courts will interfere with the decision of an adjudicator" : see para 85 of the judgment of Chadwick LJ in Carillion Construction Ltd v. Devonpot Royal Dockyard Ltd [2005] EWCA Civ 1358, 104 ConLR 1, [2006] BLR 15.

An error of fact or law will not invalidate an adjudicator's decision. If the adjudicator has answered the right question in the wrong way, his decision will nevertheless be binding. It is only if he has answered the wrong question that his decision will be a nullity : see the Court of Appeal decisions in Bouygues (UK) Ltd v. Dahl-Jensen (UK) Ltd [2001] 1 All ER (Comm) 1041, 73 ConLR 135, [2000] BLR 522 and C & B Scene Concept Design Ltd v. Isobars Ltd [2002] EWCA Civ 46, 82 ConLR 154, [2002] BLR

93.” [36] In respect of Pinnacle’s first ground of challenge that the Adjudicator acted in excess of jurisdiction by deciding in favour of DSG in respect of the retention sum of RM1,875,000.00, Pinnacle’s argument is that DSG did not claim for the same. In fact, DSG has specifically disclaimed 9 retention in its progress claim no. 15. Hence, retention sum is outside the purview of the Adjudicator’s jurisdiction. [37] According to Pinnacle, the Adjudicator awarded DSG the sum of RM4,096,184.11 which has been derived from RM2,221,184.12 unpaid certified payment as claimed by DSG + RM1,875,000.00 retention sum. Pinnacle nonetheless conceded that mathematically, there is still a 1 sen difference. [38] The claim by DSG for unpaid work done as submitted in its adjudication claim is for the sum of RM15,543,676.40 excluding interest for late payments, costs and other fees. Upon my perusal of the Decision, the Adjudicator has merely awarded DSG the sum of RM4,096,184.11 without providing any breakdown. [39] In the circumstances, I find that Pinnacle had merely deduced or speculated that the sum of RM4,096,184.11 awarded included the RM1,875,00.00 retention sum. This cannot be concluded with certainty without a clear and comprehensive exposition by the Adjudicator. [40] In SKS Pavillion Sdn Bhd V Tasoon Injection Pile Sdn Bhd [2019] 1 LNS 1548, Evrol Mariette Peters JC held that the Court should not stand in the adjudicator’s way or micromanage his duties and functions by scrutinising his decision with a fine-tooth comb. 10 [41] Be that as it may, I also find that Pinnacle’s criticism of the Adjudicator’s award of the sum of RM4,096,184.11 is in substance a challenge on the merits of her decision in the circumstances here. She has delved on the right question of DSG’s unpaid claim but Pinnacle is dissatisfied with her answer in the Decision. In Kuasatek (M) Sdn Bhd v. HCM Engineering Sdn Bhd And Another Case [2018] 1 LNS 2129, Lee Swee Seng J (now JCA) cogently held as follows: “Therefore if a matter is within the jurisdiction of the Adjudicator it does not become one that the Adjudicator has exceeded his jurisdiction merely because he had come to a finding of fact that a party does not agree with or that his interpretation of the law is flawed or faulty.” Put simply, this is basically an appeal by Pinnacle that cannot be entertained in a setting aside application under s. 15 of the CIPAA. [42] As to Pinnacle’s second ground of challenge that the Adjudicator denied Pinnacle natural justice by deciding in favour of DSG in relation to variation orders of RM5,330,169.44, Pinnacle contended that DSG originally claimed for the sum of RM6,872,375.78 and the Project architect on the recommendation of the Project M & E engineer and quantity surveyor certified the sum of RM1,542,206.34 which was already paid by Pinnacle to DSG. [43] The claim by DSG in the adjudication is thus for the uncertified claim of RM5,330,169.34 for the variation orders. DSG pleaded the certified amount of only RM1,542,206.34 represented a significant shortfall in certification and payment with inevitable impact on its cash flow. 11 [44] According to Pinnacle, the Adjudicator allowed and awarded the whole of DSG’s claim. She held as follows in her Decision: “(34) The M&E Consultant on the other hand has approved a sum of RM1,377,609.60 for the original works and seems to have attached the same table for the Variation Claims as claimed by the Claimant in its Progress Claim No. 15 for the Variation Order Items, in the sum of RM6,872,375.78. However, the pages that deal with the variation orders do not seem to have the stamp of the consultant, the stamp appears on the original works certification. The M&E Consultant’s letter and certificate can be found at page 240 of the Attachment to the Adjudication Claim Volume 1.” Pinnacle contended that the Adjudicator in so finding had gone on her on frolic in breach of natural justice because Pinnacle was deprived of the opportunity to comment on the purported M&E consultant’s certification, table for variation claims in the sum of RM6,872,375.78 and unstamped documents. Reliance is made on the English case of Cantillon Ltd v Urvasco Ltd [2008] EWHC 282 (TCC) where it was held that natural justice was denied when the adjudicator went ahead to decide a case on a factual or legal issue which was not put forward by either side without giving the parties an opportunity to comment. [45] In opposition, DSG contended that the finding of the Adjudicator in paragraph (36) of the Decision must first be read in proper context with the following other paragraphs of the Decision too: “(35) The Respondent has stated nothing in respect of the M&E Consultants certification of the works including the document without stamp. The cover letter from the said consultant is not helpful as there is no amount confirmed in the said cover letter. As such, I am accepting the contention of the Claimant that the M&E Consultant 12 has certified the amount claimed in respect of the variation orders, in the sum of

The Respondent has not refuted that the works has or has not been done, but merely relies on the issue lack of certification.

The Respondent also contends that the Claimant is not entitled to the variation amounts claimed for failure to provide particulars and responses to correspondences and “the like”. However this statement is unsupported by any evidence.

The Respondent additionally states that the Claimant is not entitled to the same because of failure to attend VO Meetings, however there is no evidence on this issue.

Also the Respondent contends that the Claimant is not entitled to these claims as they caused delay and exhibits a series of emails seeking documentation. There are many emails exhibited between the M&E Consultant and the various parties seeking “substantiation” of the VO Claims. However as referred to above, the M&E Consultant seems to have approved these VO Claims on 24 January 2019.” Pinnacle was therefore aware of DSG’s reliance on the Project M&E engineer’s unstamped table that dealt with DSG’s uncertified variation orders claim at all material times. [46] Furthermore DSG contended that Pinnacle is again in substance challenging the merits of the Adjudicator’s decision in the circumstances as disclosed here. She has delved on the right question of DSG’s uncertified variation orders claim but Pinnacle is dissatisfied with her answer in the Decision. [47] For purposes of natural justice as required to be administered in adjudication proceedings under the CIPAA, David Wong Dak Wah JCA (later CJ (Sabah & Sarawak)) held as follows in ACFM Engineering & 13 Construction Sdn Bhd v Esstar Vision Sdn Bhd (and Another Appeal) [2016] MLJU 1776: “[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 s 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 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.” (emphasis added) In the later Court of Appeal case of Ireka Engineering and Construction Sdn Bhd v PWC Corporation Sdn Bhd (and Another Appeal) [2019] 1 LNS 51, Tengku Maimun Tuan Mat JCA (now CJ) held as follows: “[38] ... There are two limbs of the rules of natural justice, the first is that a man should not be the judge in his own cause (rule against bias) and the second is that the judge must hear both sides of the dispute (rule of audi alteram partem/right to be heard). Here we were concerned with the second limb which requires that both parties be accorded the opportunity to advance their case. In the context of s 15(b) of the CIPAA, the function of the court is to look at the manner in which the adjudicator conducted the hearing and whether he had accorded procedural fairness to the appellant (see Bauer (Malaysia) Sdn Bhd v Jack-In Pile (M) Sdn Bhd (and Another Appeal) [2018] 4 AMR 425; [2018] 10 CLJ 293; ACFM Engineering & Construction Sdn Bhd v Esstar Vision Sdn Bhd (and Another Appeal) [2016] 1 LNS 1522). ... [40] There was no complaint by the appellant that it was prevented from tendering evidence or from making submission on issues raised in the adjudication. Rather, the crux of the appellant's complaint was that the adjudicator allowed the respondent's full claim without supporting documents. The appellant's complaint thus relates to the 14 sufficiency of evidence. The learned judge stated that the sufficiency of the evidence and/or the weight to be attached to the evidence is a matter within the domain of the adjudicator and that it was not a ground to be raised in an application to set aside the adjudication decision. We were in full agreement with that proposition given that s 12(a) of the CIPAA has provided that the Evidence Act 1950 shall not apply to adjudication proceedings under the Act. The learned judge was further correct in concluding that the adjudicator had asked himself the right question and had correctly considered and analysed the evidence. As such, the appellant's contention that the adjudicator had committed breach of natural justice and/or was impartial in deciding in favour of the respondent cannot be sustained.” (emphasis added) [48] On the facts here, it is common ground that the documentary evidence available before the Adjudicator in the Adjudication Submissions included the aforesaid Project M&E engineer’s unstamped table. This document is pivotal in the Adjudicator’s decision to allow DSG claim for the uncertified variation orders. [49] In the circumstances, I do therefore find that the Adjudicator went inquisitorially on her own frolic to allow DSG’s uncertified variation orders claim without giving the prior opportunity to the parties to deal with it. As a matter of fact, she based it on the documentary evidence put forth by DSG in its adjudication claim. In this respect, Pinnacle had ample opportunity to deal with it in its adjudication response. However, Pinnacle failed to do so as pointed out by the Adjudicator (see paragraph (35) of the Decision). In consequence, the Adjudicator could not be faulted for having denied Pinnacle natural justice as alleged by Pinnacle. [50] It is also not permissible at this juncture for Pinnacle to question the Adjudicator’s evaluation of the documentary evidence relied upon by her 15 particularly on the weight attached to the same. It is trite that so long the right question in issue has been addressed by the Adjudicator, the answer to that issue, rightly or wrongly, is immaterial. The appeal on the merits of the answer must not ingeniously be formulated and disguised as breach of natural justice by the Adjudicator. [51] I therefore find that Pinnacle has not been denied procedural fairness which is required to be established for a challenge pursuant to s. 15(b) of the CIPAA. In the premises OS 1 must accordingly be dismissed. [52] It follows that OS 2 must accordingly be allowed as agreed to by the parties pursuant to s. 28 of the CIPAA which provides: “28. Enforcement of adjudication decision as judgment

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.” [53] That aside, I am also satisfied that DSG has met the requirements set out in the case of Tan Eng Han Construction Sdn Bhd v Sistem Duta Sdn Bhd [2018] 1 LNS 428 and in the Court of Appeal case of Inai 16 Kiara Sdn Bhd v Puteri Nusantara Sdn Bhd [2019] 2 CLJ 229 pertaining to the enforcement of an adjudication decision. Conclusion [54] It is for the foregoing reasons that I dismissed OS 1 and allowed OS 2 as so ordered. Dated this 9 November 2020 t.t. LIM CHONG FONG JUDGE CONSTRUCTION COURT HIGH COURT KUALA LUMPUR COUNSEL FOR THE PLAINTIFF IN OS 1 AND DEFENDANT IN OS 2: KENNETH ST. JAMES (JONATHAN GERARD WITH HIM) SOLICITORS FOR THE PLAINTIFF IN OS 1 AND DEFENDANT IN OS 2: KEN ST. JAMES COUNSEL FOR THE PLAINTIFF IN OS 2 AND DEFENDANT IN OS 1: KEVIN PRAKASH (DEENASHINI S. SATHASIVAM WITH HIM) SOLICITORS FOR THE PLAINTIFF IN OS 2 AND DEFENDANT IN OS 1: MOHANADASS PARTNERSHIP